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As the impeachment process in Brazil unfolds, on May 11th the Senate asked Dilma Rousseff to step aside for up to 180 days while the chamber analyses and considers her removal from office. Since May 12th, Vice-president Michel Temer has taken office as interim president and nominated a brand new team for his government.
What has changed since then is a clear modification in the macroeconomic policies adopted. The new team has signaled Brazil will likely go through a time of fiscal austerity and more liberalism in the economy – a good thing for a country that needs to control the trajectory of its debt to GDP ratio and needs to increase overall productivity in the economy. The new team has more political capital than the former to approve the much needed measures in the congress. Central bank is likely to act more independently than under Dilma’s administration. Brazil went through a process of growth based solely on increasing consumption for the last twenty years and this cycle now has come to an end. A clear sign that this growth in consumption was coming to an end was the double digit growth most industries Euromonitor covers showed in the last 15 years, i.e. volume sales of consumer electronics growing at 13% a year for fifteen years, volume sales of consumer appliances grew by 9% a year for 15 years.
The number of Brazilians that depend on government aid over the past fifteen years have decreased. They majority now had jobs and jobs having disappeared so have vanished people’s support for Dilma.