Rio De Janeiro / AFP
The Federation of Sao Paulo Industries is lit up in the green and yellow of the Brazilian flag, a giant black banner cutting across its facade with a blunt message: “Resign now.”
The powerful industry group is not the only major player in the Brazilian economy that is openly hostile to embattled President Dilma Rousseff.
With Latin America’s largest economy plunged in its deepest recession in 25 years, business chiefs have exuberantly welcomed new impeachment proceedings against the leftist leader, who is accused of manipulating the government’s accounts. The Sao Paulo stock exchange leapt 6.6 percent on Thursday, its biggest gain in seven years, after the latest series of damaging setbacks for Rousseff.
“The market is celebrating the end of this government,” economic analyst Andre Leite of TAG Investimentos said.
Markets normally abhor instability, but Brazil’s toxic combination of runaway recession, inflation and debt â€” plus an explosive corruption scandal centered on state oil company Petrobras â€” have the financial world rooting for the downfall of Rousseff and her Workers’ Party. “Investors seem to be betting that the Workers’ Party and Dilma will lose power, giving rise to better times,” said David Rees, an economist and Latin America specialist at consultancy Capital Economics.
Analysts have been critical of Rousseff’s economic policy, bemoaning a lack of budgetary oversight or strong measures to escape the current crisis.
“Every time Dilma seems close to going down, stocks go up and the country risk rating goes down,” said Margarida Gutierrez, a professor of macroeconomics at the Federal University of Rio de Janeiro.
On Thursday, the Federation of Sao Paulo Industries (FIESP), an umbrella group of some 130,000 businesses, publicly came out in favor of impeaching Rousseff.
“Society wants a change. It wants the removal of the president,” said FIESP president Paulo Skaf. He then slipped into a reverie about a Brazil where it will be possible to “renew investment, job creation, entrepreneurship, strengthening businesses.” But Rees, of Capital Economics, was more circumspect.
“We are not convinced that better policy-making lies ahead,” he said.
“Even if there was a change of government, it’s not clear that anyone would have the ability to get tough reforms passed, so the structural problems in the economy could remain for some time.”
The impeachment process is long and complicated: It can take six months or more and requires two-thirds of votes in both the lower house and the Senate.
That timeline could be sped up in a climate of growing hostility toward the government, said Joao Augusto de Castro Neves, Latin America director at the Eurasia Group consultancy.
“The odds of a government change are definitely increasing. This could happen as soon as early May,” he said.
If Rousseff is removed, Vice President Michel Temer of the centrist PMDB party would serve out the rest of her term, until the winner of the 2018 presidential election takes office. “It is sure that the Temer administration will have a honeymoon period, but the question is, how long will it last?” said Castro Neves.
“Even if we believe Temer will introduce positive changes in the economy, he won’t have the political capital to implement ambitious reforms.”
He warned that Temer also risked stumbling himself, if he or his allies become bogged down in scandal.
Several leading PMDB figures are implicated in the Petrobras scandal, which has already felled a Who’s Who of powerful politicians and business execs.