Take a look at this article by Mr. Messana in Il Sole 24 Ore, the situation in Brazil today in the face of the pandemic that has left the world in social isolation, and find out what the situation related to the health, political and economic issue of the country.
Find out more about the Brazilian economy here.
Brazil has had the advantage of being able to build on the experience of Italy and the other countries affected by Covid19. At the moment, in early April, there are about 200 deaths from the virus on about 200 million people and about 5,000 people infected. The numbers can change quickly, but the Ministry of Health has intervened well enough in advance to direct people to stay at home and avoid crowding, however, the country has critical social inequality and in many disadvantaged regions that these restrictions will be more difficult to implement.
Some temporary hospitals have already been set up and others are being built in fairground pavilions or stadiums, but Brazil still offers a good ratio of intensive care beds vs. the number of citizens, statistics show that roughly this report Cuba twice as much as Italy. However, what is most intimidating is the inability to serve a high number of serious cases at the same time, an event that would cause the health system to collapse.
Polls gave Bolsonaro an all-time low in popularity and consensus as early as February. Therefore, it is not new that his figure as president has already been questioned, much less the effect of recent grievances expressed in pans from the windows of the house. With March and the triggering of the issues related to Covid19, its approval rating has fallen more due to its position on the behaviors to be adopted in contrast to the best practices of the WHO that provide for social distance.
Bolsonaro’s fears are a high increase in unemployment and a deterioration in certain categories of the population that would result in further deaths (indirect deaths).
It is interesting to note how the Minister of Health Henrique Mandetta, of Italian descent, has gained a lot of popularity and showed his technical and tactical competence, even distancing himself from the radical positions of the President Bolsonaro and serving as an example to the governors of most of the states of Brazil that have imposed social isolation.
However, Bolsonaro’s problems are not only stemming from the issue of the health emergency but are also linked to other factors, one for all, the delicate positions of the three children who are all involved in politics and often involved in controversies of varying Nature. The last one happened a few days ago that saw the Deputy Flavio Bolsonaro accused on twitter China of having concealed relevant information about the Covid19 and caused this world pandemic.
While there has been talking of Bolsonaro’s impeachment, this is a decision that the opposition itself is not very inclined to support at the moment. No one today knows the extent of a potential crisis linked to the coronavirus and those who would oppose Bolsonaro in an impeachment request would become part of the problem of this crisis and not a solution. Moreover, the opposition is somewhat afraid that the hiring of his deputy, General Mourao, a more moderate and less impulsive exponent, would strengthen the current government and not weaken it.
The economy minister, Paulo Guedes, was also highly regarded for the achievements he achieved during 2019, effectively provoking Brazil’s economic recovery. Compared to the global trend of the economic deceleration, Brazil PIB was accelerating in the first quarter. Now, of course, Guedes is also facing difficult decisions, is trying to mitigate the effects of paralysis with tools to support unemployment and loss of income, and necessarily is increasing public spending, with the mission of not make interventions of extraordinary measure as a permanent expenditure. These measures, which are currently worth around 750 billion, together with the blockade of non-essential services, have already revised the Ministry’s PIB estimates for the current year, reducing it from 2% to minus 0.5% in line with recent projections from The Brazilian Central Bank.
In favor of Brazil, however, it plays its ability to react to deep crises very quickly, at the expense of its size the country had left behind in a short time the crisis of 2015-2016 considered the worst crisis of the last 50 years. It is unlikely to believe that, after the wave of the coronavirus, the processes of investment in infrastructure and opening up on sectors, cabotage, oil & gas, water treatment, and energy will stop. And capital with the same speed with which they have come out will be able to return for those who know how to read the country from a long-term perspective.
*Managing Partner GM Venture