In a First, Brazil Elects a Woman as President

by Alexei Barrionuevo for The New York Times, October 31st, 2010.

Dilma Rousseff was elected the country’s first female president on Sunday, as Brazilians voted strongly in favor of continuing the economic and social policies of the popular president, Luiz Inácio Lula da Silva. Ms. Rousseff, who served as Mr. da Silva’s chief of staff and energy minister, joins a growing wave of democratically elected female leaders in the region and the world in the past five years, including Michelle Bachelet in Chile, Cristina Fernández de Kirchner in Argentina and Angela Merkel in Germany.

Ms. Rousseff, 62, defeated José Serra, the former governor of São Paulo, with 56 percent of the vote to 44 percent, official numbers showed. In choosing Ms. Rousseff, who has no elected political experience, voters sent a message that they preferred to give the governing Workers Party more time to broaden the successful economic policies of Mr. da Silva, whose government deepened economic stability and lifted millions of Brazilians out of poverty and into the lower middle classes.

In her victory speech, Ms. Rousseff pledged to focus on eradicating poverty, which she described as an “abyss that still keeps us from being a developed nation.” She has indicated that she favors giving the state greater control over the economy, especially the oil industry, potentially steering the country further to the left. After serving two four-year terms, Mr. da Silva was barred from seeking re-election, and he hand-picked Ms. Rousseff to be his successor, campaigning tirelessly for her. “He treated this campaign like a re-election campaign,” a sociologist, Demétrio Magnoli, said on television on Sunday night. (continue reading… )

Brazil: Why Executives Should Care Who Wins

by Clinton Carter for Latin Business Chronicle, October 25th, 2010.

Why Wall Street doesn’t care who wins Brazil’s watershed elections, but executives should. 

Executives building businesses in Brazil should take note of this Sunday’s presidential election runoff. This election will have a major impact on the ability of multinationals operating in the country to turn GDP growth into profit for their companies.

BRAZIL GROWS WHOEVER WINS

Brazil is about to elect a former communist guerilla, Dilma Rousseff of the Workers Party (PT), to the highest office in the land. There could be no greater demonstration of Brazil’s new status as the country-that-can-do-no-wrong in the eyes of the investment community than the corresponding indifference of capital markets and financial institutions to this political development.

That Dilma will win the presidential runoff is a near certainty, as questions over her view on abortion and new allegations of abuse of power against her are again failing to elicit much more than shrugs and channel surfing from the electorate.

Likewise, investors believe Dilma poses no threat to the growth of the Brazilian economy. The conventional wisdom driving this insouciance holds that Dilma Rousseff and her challenger, José Serra of the PSDB, will follow a similar set of orthodox macroeconomic policies, much as current president Lula da Silva of the PT continued most of the policies established by his predecessor, Fernando Henrique Cardoso of the PSDB.  Serra would, of course, also follow the policy blueprint designed by Cardoso. This framework will ensure relatively low inflation, moderate to high interest rates (though low by historical standards), a stable currency, and capital inflows needed to invest in long term growth. These conditions, in turn, will guarantee macroeconomic stability and growth, and concurrent strong returns from investments in Brazilian debt and equity. (continue reading… )

Brazil’s Evolutionary Election

Interviewee:  João Augusto de Castro Neves, Political Analyst, CAC Political Consultancy. 
Interviewer: Roya Wolverson, Staff Writer, CFR.org

for the Council onForeign Relations, October 4th, 2010.

Brazil’s October 3 presidential election gave no decisive answer as to who will lead the world’s fourth largest democracy in 2011. A potentially complicated runoff election is scheduled for October 31. Brazilian political analyst João Augusto de Castro Neves says Workers’ Party candidate and presidential favorite Dilma Rousseff–who garnered 46.9 percent of the vote–is still likely to prevail, despite a potential deal between her two rivals to pool votes behind remaining candidate Jose Serra of the Social Democratic Party–who received 32.6 percent of the vote. Financial markets’ non-reaction to the country’s election reflects growing international confidence in Brazil’s maturing democracy and economic progress, says de Castro Neves. But the next president will still need to create better economic policies that avoid traditional emergency economic plans and instead tackle the country’s new “risks of living with abundance,” he says. On the diplomatic front, either candidate would likely ease away from close relations with authoritarian regimes like Iran and Cuba, since these initiatives were the result of President Lula da Silva’s “hyperactive presidential diplomacy,” he says.

There is speculation that front-running Workers’ Party candidate Dilma Rousseff might be challenged by a deal between her close competitor Jose Serra and the Green Party Candidate, Marina Silva. How will that play out in the runoff on October 31?

A look at Brazil’s recent history shows that even when there’s a runoff, usually the one that was first place is still the favorite.It was a surprise that Rousseff didn’t win in the first round, but she’s still the favorite, [considering President] Lula de Silva’s popularity plays in her favor. The “transfer of votes” idea is very uncertain in Brazil. Even if the Green Party’s Silva declares that she’ll support Serra, that doesn’t meant that all 19 percent of voters will go and vote for Serra.

Why did Silva make a bigger-than-expected gain in the election?

First, opinion polls in Brazil tend to inflate the numbers of the official candidate, so some say they didn’t pick up on Marina Silva’s numbers.(continue reading… )

Fund managers relaxed about Brazilian elections

by Anthony Harrington for QFinance, October 5th, 2010.

Despite the head start given by Brazil’s thriving economy, the country’s ruling party candidate Dilma Rousseff, was unable to win Brazil’s presidential elections on October 3 by a sufficient majority to avoid a runoff scheduled for October 31. Rousseff won 47% of the ballots, falling short of the required 50% plus one required to put her past the post ahead of her main challenger, the former governor of Sao Paulo, Jose Serra.

Rousseff, who has something of a worrying reputation as an interventionist in economic matters, remains the odds on favourite to become the country’s new President.

Rousseff had been expected by many to win outright. A Reuters report just before the election pointed out that Serra had managed to turn a 10 percentage point lead in the polls, dating from February, into a 20 point lead for Rousseff in the run up to the election. The general view throughout the campaign has been that Serra was going to struggle against the impetus given to Rousseff’s campaign by the huge personal popularity enjoyed by Brazil’s outgoing President, Luiz Inacio Lula da Silva.

All in all, the global investment community seems fairly relaxed over the probable outcome. The Association of Investment Companies (AIC) recently sampled the views of a handful of fund managers in the region. The AIC points out that the Brazilian economy has been performing pretty well and has rewarded fund managers with a deep understanding the Brazilian markets. The sector veteran fund, BlackRock Latin America, outperformed the investment company average over both the short and the long term, demonstrating the attractiveness of the region.(continue reading… )

Brazil’s Economic Policies Under President Rousseff

by Thomas Trebat for Roubini Global Economics, August 31st, 2010.

I would be the first to admit that I am not very good at reading the political tea leaves in Brazil.  I once anticipated that Jose Serra would win the presidency – in 2002!  I even thought this pragmatic centrist had a good chance to win in 2010.  Of course, I never envisioned the emergence of .  Wrong again!   It now looks like Dilma in an absolute landslide and in the first round, no less.

All of this should disqualify me from speculating about the economic policies to be adopted by President-to-be Rouseff when she assumes office in January 2011.  But I am going to hazard some guesses anyway on the (dubious) theory that if you cannot forecast well, forecast often. 

I will start with a fairly safe call.  The new administration will go to some lengths to convey continuity with Lula in terms of policies and players.  After all, why rock the boat when the foreign investors are so happily on board?  (continue reading… )