Like millions of poor Brazilian women, Mrs. Pereira has been working as a domestic worker since she was 16, but by the time she is 55, she has not contributed a single day in her entire working life.
And now this Brazilian can't even get hired to clean for hours.
Unemployed for years, her main source of income is the social aid from the Brazilian Government for the poorest, she counts in her house, on the outskirts of Salvador de Bahia.
It is a monthly payment formerly known as Bolsa Família, which was the great instrument in the fight of Luiz Inácio Lula da Silva and the progressive governments against poverty.
The current president, Jair Bolsonaro, of the extreme right, reformulated it, partly forced by the pandemic.
But first of all, he renamed her.
He wanted to snatch that flag from the Workers' Party (PT).
Now it is called Aid Brazil.
The president, who came to the presidency with an ultraliberal speech on the economy, initially doubled the monthly pay to 400 reais (77 euros).
And, in this final stretch of the mandate, he has raised it again in a maneuver considered electoralist, and suicidal, due to the impact on public accounts.
Aid Brazil, its political use and its future —with 20 million Brazilians who need it to eat— was one of the issues that confronted Lula and Bolsonaro the hardest in the first electoral debate, last Sunday.
This pay is, along with inflation and misinformation, the main protagonist of the campaign for the elections on October 2.
If none of the candidates obtains the majority of the valid votes, there will be a second round four weeks later.
These are crucial elections because the electorate will decide whether to grant power to the favorite in the polls, Lula, who promises to reissue what he considers the best of his mandates (2003-2010), or to Bolsonaro, who in a second legislature would deepen the swerve to the extreme right.
Any of them will face a very complex international economic situation.
Brazil has suffered, like everyone else, the impact of the pandemic and the war in Ukraine.
It is no longer what it was, especially for a decade with practically no growth, with what it means for an emerging and extremely unequal country.
GDP grew 4.6% last year after the collapse of the pandemic (-3.9%).
The data for the second quarter of this year, which has just been published, puts the increase at 1.2% and is better than expected by analysts.
But the cracks continue to cross the country.
The richest 1% of Brazilians accumulate 49% of the national wealth;
in the US it owns 35%, according to the World Inequality Lab, co-directed by Thomas Piketty.
Bolsonaro arrived with the promise of slimming down the state to the point of leaving it on its backbone and undertaking structural reforms that, according to economists and businessmen, are essential.
He appointed Paulo Guedes, a former Chicago school investment banker, Minister Plenipotentiary of Economy and the first year he started strong with the reform of the pension system, but the pandemic forced him to change course.
His legislature has traveled a very different path.
He broke the tax ceiling, in part, to carry out one of the most generous economic stimulus programs of any emerging economy during the pandemic.
Spending even surpassed that of many developed economies, which can borrow at lower interest rates.
In July, the Economy Ministry said the primary budget deficit this year will be 59.354 billion reais (11.4 billion euros).
The spending ceiling for next year is 1.7 trillion reais (326,000 million euros).
With 210 million inhabitants, it is the main economy in Latin America.
Its population is relatively more homogeneous (in ethnic and religious terms) than most emerging countries (for example, India or South Africa), so it has always been the market that every company wants to conquer.
However, promises to boost the purchasing power of the middle class have been dashed.
Creating jobs to boost consumption and for the economy to grow is Lula's recipe, who has not detailed how he intends to achieve it.
unfulfilled expectations
“Brazil, unfortunately, has been disappointing in terms of macroeconomic performance,” says Alberto Ramos, chief economist for Latin America at Goldman Sachs, from New York, “it has fallen short, not only with respect to expectations, but also to the potential of the country. , and that is a reflection of bad policies.”
Joelson Sampaio, professor at the School of Economics of the Getúlio Vargas Foundation (FGV), agrees from São Paulo that the balance pales in comparison to expectations: “Basically we have had Eletrobrás as the most relevant privatization, the others made little progress.
The government did well in the sale of concessions.
We have tendered batches of airports, ports, federal highways…”.
A Spanish businessman who has been doing business in Brazil for a decade as a senior officer of a multinational in the renewable energy sector and who prefers anonymity, stresses, also by phone, that “the first year and a half was very hopeful.
And then came the pandemic.”
This close election has a peculiarity: despite the fact that both candidates were presidents, the markets do not know what to expect from them in the future, warns Goldman Sachs's chief economist for Latin America.
“This is, basically, a choice between two devils and the markets know it very well”, says Ramos, “here the issue is that continuity is problematic”.
The pandemic hit the Brazilian economy a lot, points out the FGV Economics professor, but “in 2021 and 2022 we had a recovery process.
The unemployment rate, which was high in these years, has only dropped below double digits in 2022.
Unemployment closed the second quarter at 9.1%.
He stresses that although inflation is a global evil, its impact here is especially severe.
"In an emerging and unequal country like Brazil, it has much more impact than in Europe or even the United States, where families have more income and more wealth."
As the rise in prices has affected food above all and the Brazilian tax system relies much more on indirect taxes than direct taxes —a reflection of inequality— the impact among the poorest is devastating.
Just look at the increase in families sleeping on the street.
A developing country, Brazil has a tax burden that more closely resembles rich countries than its peers.
These resources are spent inefficiently, instead of being invested in works or projects with a high economic or social return.
The tax reform is one of those that remained in the pipeline.
One more time.
But the Executive has managed to reduce public debt, which is around 78% after shooting up to almost 89% in the pandemic.
Green shoots
The real has recovered somewhat but the euro is trading at 5.22 reais.
Exports are soaring, with 280,000 million dollars in 2021. And on the horizon there is a green shoot that the president is clinging to.
Petrobras has reduced fuel prices several times after pressure from Bolsonaro, who has changed the president of the oil company four times.
He has celebrated that July closed with a deflation of 0.68%.
It matters little whether it is beneficial or detrimental to the economy in the long run, the president already has a slogan to offer the electorate to say that Brazil's economy is better than the rest of the world.
It is worth mentioning that the Central Bank, which is autonomous, was ahead of most of its peers by initiating aggressive interest rate hikes in March 2021 to contain inflation.
In the debate between the presidential candidates, Bolsonaro stated that Brazilian inflation is below that of the United States.
It is true that the last month was lower, although in the accumulated figure it is far behind.
But this campaign is thick.
The favorites offer emotions in abundance, low blows to the adversary —Bolsonaro calls Lula an ex-prisoner— and little concreteness.
reforms
The main reform approved by this legislature is that of the pension system, which went ahead in his first year in office and was designed by the previous government.
The new law imposed a minimum retirement age in a country where men retired on average at 57 years old and women at 53. Bolsonaro and Minister Guedes also have the norm that establishes the autonomy of the Central Bank .
Pending were the tax and administrative reforms.
The aforementioned Spanish businessman stresses that the tax reform would be a watershed.
“Understanding taxes in Brazil is impossible.
Achieving a system that a foreign investor could easily understand would increase interest in the Brazilian market.
There are few places outside the OECD with the legal certainty of Brazil.
Its potential is enormous because it is a quiet market”, he points out.
Most businessmen prefer a second term for Bolsonaro to a third for Lula, although the far-right is concerned about the threats to democracy and his determination to question the voting system.
The big bankers and businessmen joined a recent letter in defense of democracy that achieved a million signatures.
João Camargo, partner of the 89 Investimentos group, which has interests in logistics and communication, chairs Esfera Brasil, a
think tank
created by half of the hundred largest entrepreneurs in Brazil.
Camargo says that Faria Lima — the street in São Paulo considered the Brazilian Wall Street — is enthusiastic about Bolsonaro.
“The businessmen are all very satisfied because the team is really brilliant.
Both Minister Paulo Guedes and the election of Roberto Campos, (president) of the Central Bank, who is now independent;
Minister Freitas (of Infrastructure), a giant that achieved almost a billion reais in investment in infrastructure, in ports, railways and highways (....) Minister Tereza Cristina in Agriculture... Brazil is an example of efficiency in agriculture.
It is impressive, we are giving a show in the world”.
When asked about Bolsonaro's biggest mistake, he replies: “Where the president is not so good is in communication.
He does not communicate well, even though the Government is very efficient”.
Bolsonaro has used heavy artillery in an attempt to turn the polls around: he is 15 points behind Lula, according to Datafolha.
He achieved parliamentary support to, on the eve of the campaign, pass a law, nicknamed kamikaze, which opened the doors of public coffers to distribute 7,500 million euros in aid to the poorest —such as Mrs. Pereira's pay—, taxi drivers and truck drivers, the latter groups related to Bolsonaro.
To avoid the laws that prevent these extravagance in an election year, Bolsonaro's parliamentary allies declared a state of emergency.
For the Spanish businessman, the management of the Bolsonaro government in recent months is inappropriate, he seems to emulate the enemies he criticizes so much.
"They launch a very populist message worthy of any leftist government, not one that calls itself liberal."
Guedes was considered the guarantee that Bolsonaro was going to fulfill the liberal agenda with which he attracted a white middle class really fed up with the corruption scandals of Lula's party.
Although the pandemic dynamited the superminister's privatization plans, Guedes remains faithful to Bolsonaro.
Neither the maneuvers to circumvent the spending ceiling nor the cataract of resignations in his ministry have led to his resignation.
Coup?
Ramos, of Goldman Sachs, maintains that, if a second Bolsonaro term were like the first, uncertainty derived from his frictions with other institutions and the press would prevail.
“This means that, despite the fact that the mix of public policies that the president has sought, such as privatization, streamlining in the private sector and concessions, are relatively market-friendly, his Achilles heel has been governability.
His lack of ability to create consensus to carry out the necessary reforms that would detonate the country's economic potential ”.
Since 2019, Bolsonaro has systematically eroded Brazilian democracy with constant attacks against the judiciary, the criminalization of his opponents and attacks on the press, in addition to encouraging the coup discourse of his most radical followers.
Several large Bolsonarist businessmen are being investigated by the police for belonging to a WhatsApp group in which coup messages were posted.
Although there has been criticism of the operation for considering that it threatens freedom of expression, the fear of an institutional breakdown is in the public debate.
A couple of weeks ago, Sphere Brazil brought together senior representatives of the three powers before the international press.
They made a closed defense of the strength and institutional harmony of the State.
Camargo, president of this
think tank
, flatly rejects the risk of an anti-democratic rupture.
“Look, how was the 1964 coup here?
The entire
establishment
, the entire society, wanted the coup.
With the dismissal of Dilma and Collor, the same thing, the people took to the streets.
Now, if Lula wins or Bolsonaro wins, everyone wants the winner to take office.
So there is not the slightest chance that whoever wins will not take over.
Society sees no need for a coup.
Among other things because Lula has already proven to be a great president”.
anemic growth
The British Edmund Amann arrived in 2017 at the University of Leiden, in the Netherlands, to head the department of Brazilian studies.
Rousseff had been impeached the previous year and the economy was in the deep end.
At his inaugural conference, Amman spoke of the huge economic potential…and how investor sentiment was beginning to weaken.
“Advocates of a broader state role and advocates of a free market have alternated with each other on the government stage.
As a result, Brazil has been thrown back and forth between two completely different economic theories.
It has been a kind of economics laboratory for idealists,” he said then.
On the phone from Leiden, Amann acknowledges that, five years later, little has changed.
The governments of Lula, Rousseff and Bolsonaro have lacked a vision of the country that indicates the direction to go.
The way to walk towards that vision may be different, she alleges, and according to the ideologies of each one, but the final objective must be the same.
"There have been areas that have improved, but few," says the specialist.
There has been innovation in agricultural production, so that Brazil is one of the most important suppliers of food.
In this world of "very high commodity prices and serious supply chain issues, that's really a big deal," says Amann.
At the same time, dependence on commodity exports has worked like a curse (or a trap).
For Professor Sampaio, from the FGV, "during this decade Brazil practically walked sideways, it did not grow at all".
The pandemic, the economic crises and the always postponed structural reforms have contributed to this.
"What we have been doing are circumstantial, punctual measures that resolve in the very short term, but do not bring a long-term solution."
The Brazilian academic is pessimistic, he does not see that the reforms are a priority for either of the two favorites, Lula and Bolsonaro.
"And, if we don't grow, we can't reduce inequality or poverty."
A demonstrator shows a ticket with the face of Bolsonaro during a protest for the economy in Brasilia.
Andressa Anholete (Getty Images)
Lula shelters himself in ambiguity about his economic plans
Among the millions of moonlighting Brazilians who struggle to make ends meet, it is easy to find those who fondly remember their first refrigerator, their first car, the day they took a plane or one of their children entered university.
It was at the beginning of the century, during the boom of the Lula years.
Nostalgia is the main ingredient in the electoral campaign of Luiz Inácio Lula da Silva, 76, to return to the Presidency of Brazil.
Times that the former president summarizes in a small pleasure now prohibitive for the vast majority.
"The people have to go back to being able to eat barbecue, picanha (a cut of noble meat) and have a beer," he often repeats at his rallies.
And the public's eyes shine.
Favorite to win the October elections, the leftist Lula wants to repeat the most successful measures of his two mandates (from 2003 to 2010).
He insistently repeats the data that illustrates those achievements (30 million came out of poverty, 20 million new jobs, twice as many university students...), but when asked for details about how he intends to achieve it again, in the current situation, he takes refuge in the memory of the past and ambiguity.
In a recent appearance before the international press, he explained that "in economics you cannot tell all your plans because, then, someone appears to prevent it."
Brazilians are summoned to the electronic polls on October 2 and if no one achieves a majority, there will be a second round on October 30. The market expects a victory for Lula, based on polls that give him a wide margin,
and the price of the real already reflects this expectation.
It is revalued.
Lula loves slogans.
One of his great promises is to "reinclude the poor in the budget" of Brazil, that is, to resume the social inclusion policies that transformed the lives of the most needy, the voters who remained faithful to the Workers' Party (PT ) during corruption scandals.
The founder of the PT has also revealed that, if he wins, his Economy Minister will not be a technician, but a politician with the waist and experience to negotiate with the powerful Congress.
To avoid defining himself, he does not have a head economic adviser but several.
In front of foreign correspondents, he announced a great infrastructure construction plan with public money to attract private investors, criticized the efforts to limit spending and boasted of fiscal responsibility.
He also refused to privatize public companies such as Petrobras or the Post Office and, to combat inflation, he proposed taking fuel prices off the international markets, without explaining how he would do it.
And he wants to renegotiate the labor reform following the model of Spain.
The memory of the second Government of his successor, Dilma Roussef (2010-2016), causes chills in the business community.
Rousseff used public money and subsidies to alleviate popular discontent and survive in office.
The result was that Brazil fell into a deep recession, she ended up impeached by Congress and hatred of the PT elevated Bolsonaro.
Although they are no longer afraid of him in the 1990s, the economic power is still suspicious of Lula.
To mitigate that rejection, she devised a clever move.
He recruited Geraldo Alckmin, 70, a veteran center-right conservative politician, whom he beat in the 2006 presidential election, as his vice-presidential candidate. Alckmin's mission is to make Lula more palatable to big executives (and evangelicals).
A street vendor sells towels with the image of Jair Bolsonaro, president of Brazil, and Luiz Inacio Lula da Silva. Jonne Roriz (Bloomberg)
The majority of the business community prefers Bolsonaro because he seeks less state intervention in the economy, although he is far from having fulfilled his aggressive liberalization plans.
But at the same time they are, like Lula, extremely pragmatic.
They know that the former president is a man who listens and negotiates until exhaustion.
They even privately acknowledge that, with it, Brazil would regain international projection and attract new foreign investment.
During the Bolsonaro Administration, the loss of confidence of foreign investors exacerbated a depreciation of the real against the dollar, which was 37%.
The president's decision to dodge the fiscal ceiling, as well as the lack of confidence that the monetary authorities could control inflation, generated a rapid capital outflow.
Instead,
During Lula's term as president, the currency appreciated nearly 50% against the dollar.
Lula's golden years were largely fueled by the dramatic rise in Chinese demand for raw materials.
Beijing replaced the US as the main trading partner, but now the growth of the Asian giant has slowed down.
A Spaniard who holds a high position in a multinational in the renewable energy sector believes that, if he wins the elections, "Lula is going to be very pragmatic because he wants to be remembered as the best president of Brazil and remove the stain of his second term .
Whoever he is (the next president), we are going to live very good years”.
This businessman maintains that the outlook for doing business is much more uncertain in Chile or Colombia than in Brazil.
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