Brazil: Who Will Win The Brazil Election - And What Will They Do To Fix The Economy?

Last Updated: 24 October 2014
Article by Ricardo Aquino

Incumbent president Dilma Rousseff is virtually neck and neck with surprise pro-business contender Aecio Neves. But what has got the Brazilian people so energised about this election?

In 2001 the term BRICs entered our vocabulary, cited as the most promising up and coming investment destinations in the world – and Brazil was perhaps the most exciting of these. The prediction was a solid one, with Brazil's GDP hitting a magnificent 7.5% at the end of 2010.

But since then we've seen a major slowdown and widespread unrest, evidence of which marred the recent World Cup celebrations.

In the first round of the country´s presidential elections on 5 October, Rousseff secured 41.6% of the vote and Neves was behind with 33.6%. Now the economy is a central campaign issue for Worker's Party candidate Dilma Rousseff and Social Democratic Party candidate Aecio Neves, who will face-off against each other in the run-off ballot this Sunday 26 October. Growth for this year is forecast at just 0.3% and following two quarters of negative growth the economy is officially in recession.

The candidates

The challenges to the Brazilian market are many and doing business in the country is notoriously difficult. Yearly, PwC works with the World Bank and the International Finance Corporation (IFC) to produce a comparison of tax systems in economies worldwide. In the 2014 report, Brazil held its position as the most time-consuming tax regime in the world.

Tax professionals in Brazil are said to spend 2,600 hours a year complying with regulations, so it's little wonder businesses are crying out for change. Penalties can be aggressive and are not infrequent, given the endless number of tax regulations. To add to the burden, the government has assembled a huge tax surveillance system, increasing the pressure on tax payers.

While Neves has come forth with promises to make Brazil more competitive by overhauling the burdensome fiscal system, Rousseff is highlighting the impressive employment rate of around 95%. On top of that, wages have steadily risen and welfare programmes have helped to lift 40 million people out of poverty over the past decade. But Neves has promised voters that the welfare programmes won't be cut, blurring the opposition lines.

In terms of business, the current government's attitude is largely internally focused, with incentives mainly available for national manufacturing and construction companies. Rousseff's government has been keen to encourage consumers to buy more domestic products, reducing interest rates to stimulate spending at the beginning of her tenure, but in turn fuelling inflation. Tax incentives have also been extended to consumers on the price of new cars, motorcycles and white line goods.

Opinion is fairly evenly divided on Brazil's two polar candidates but Neves' stance on opening up the market and a return to an orthodox macroeconomics agenda has won over many from the financial sector. Behind the scenes he is being supported by former Central Bank director Arminio Fraga, whose solid reputation and recognition in the international market lends Neves even greater credibility. Former presidential runner Marina Silva has also thrown her weight behind the Neves campaign following his agreement to pursue a green environmental programme. But whether Silva's supporters will follow suit is another question entirely.

Public feeling

The Worker's Party has been in government for 12 years now, overseeing Brazil's boom time and now its stagnation. For Neves and Rousseff supporters alike, it seems that a fresh start is just around the corner.

Groaning under the weight of its reputation, Brazil certainly wants to deliver on its promise to one day be a global power house. Whatever its issues, it's an economy that multinational businesses can't ignore – and they haven't. Many multinationals have carved out a place for themselves in Brazil, including the likes of Fiat, who is developing the country's biggest manufacturing project in the north-eastern city of Goiania.

And we can't mention Brazil without touching on the recent World Cup and the 2016 Olympics. Many lessons will have been learned from hosting the footballing spectacle which will be applied to the next sporting event and, whatever the criticisms, it will spur on another round of investment in infrastructure – a major issue for Brazil, particularly if it wants to attract FDI and boost GDP.

Neves has thrown down the gauntlet to Rousseff, and is ready to revolutionise Brazil, targeting economic policy, the tax system, infrastructure and the energy sector. But Rousseff is rising to the challenge, also promising major tax reforms, greater investment in infrastructure, a new education programme and an expansion of her social policy programmes which have led to an emerging middle class.

Ultimately, in an election battle that is currently too close to call, one thing is certain; the Brazilian people are clamouring for improvements which will see their country an undisputed competitor on the world stage. Whoever the victor, change is certain because the country is at a turning point and the world is watching.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.