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THE DISASTROUS DILMA ROUSSEFF GOVERNMENT IN BRAZIL
Fernando Alcoforado *
With Dilma Rousseff, the Brazilian economy kicks ten years in two. From 2013, the
country witnessed a progressive worsening of economic indicators - both those that
reproduce the real economy and those who capture future expectations. Since then, the
consequences became visible in the industry, investment, labor market, and, ultimately,
income Brazilians, which is eroded by inflation and higher interest rates. The Broad
Consumer Price Index (IPCA), which measures the official inflation is currently at
8.4%, the highest level since May 2005, when it reached 8.05%. Already the Selic
(basic interest rate of the economy) is at 13.75%, the highest level since January 2008.
The deficit in the balance of payments in 2014 was the largest in history. A striking
example of kicker what happened is the Brazilian household consumption, measured by
the Brazilian Institute of Geography and Statistics that accounts for 60% of Gross
Domestic Product (GDP). This indicator has been responsible for the growth of Brazil
for at least ten years, but that should start to crumble in 2015. With regard to the
productive sector, the industry also has nothing to celebrate for many decades. The
industrial sector accumulated a fall of 3.15% in 12 months through January 2015. And
even the high dollar should not solve the industry's problems. In other words, the more
expensive currency benefits those exports, but penalizes else who depends on imported
inputs. Companies who have listed debts in American currency can also be caught off
guard.
The regression occurs not only from a macroeconomic point of view. Of more concern
is the significant worsening observed in the business environment. In general, we have a
very clear step backwards in several dimensions. This nebulous scenario, increased the
"Brazil risk" indicator that points, in general, the perception of investors regarding the
country's ability to pay its debts. According to JP Morgan, the "Brazil risk" presented its
highest value since May 2009, the height of the international financial crisis. Remember
that the trend of Brazil risk is high, considering the worsening of the political crisis and
of the Brazilian economy crisis, including corruption scandals involving Petrobras. All
this leaves the market more fearful.
There is a great difference between the current situation and the 2000s about the
sentiment of market players. In that decade, the feeling was that things could improve,
while what is presented now is a steady deterioration scenario. Early last decade, we
lived a process of economic recovery, following the implementation of the Real Plan.
We had an improvement in the external environment, a search for internal
macroeconomic balance, which marked the two governments of President Lula. The
current situation, however, reflects opposing view. In many sectors, the confidence
index hit historic lows, according to polls compiled by the Brazilian Institute of
Economics of the Getúlio Vargas Foundation (IBRE / FGV). In industry, for example,
the Industry Confidence Index (ICI) reached in February 2015 the lowest level since
April 2009.
There is an attempt by the finance minister Joaquim Levy, to reverse this situation.
However, the measures recommended by the Minister Levy undermine economic
growth and the interests of Brazilian workers, especially those that reduce employee
benefits. In contrast, people feel cheated by the political keeping promises made during
the elections by President Dilma Rousseff. While this is going on a massive downturn in

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the labor market that was accentuated mainly in two sectors. In the construction sector,
609,000 jobs disappeared with a drop of 7.6%, and in the public sector which lost
560,000 jobs with a fall of 9.5%. The data is the Quarterly Continuous PNAD, new
research jobs and income of IBGE. This is not to say that the recession is concentrated
only in the construction sector, because the pace of job creation in other sectors slows
down too.
The recession ravaging the Brazilian economy is concentrated in the construction sector
that is of particular interest because of the collapse of the works in Brazil is due to
disorder caused by the crisis in Petrobras and the corruption scandal in the contractors
with the case Lava Jato, criminal case that investigate the assault on the coffers of the
state company, Petrobras, for gang composed of company employees, businessmen and
politicians. Elsewhere, the recession of the works due to the cutting of expenses due to
the adjustment or fiscal tightening and delays of works of payments, which had since
2014, caused by disorder of government accounts Dilma Rousseff. Added to all this
incompetence and the turmoil in public administration, from the lack of spending to
poor management at Petrobras, and the systemic corruption that seem to play an
important part in the rapid disintegration of the Brazilian economy. Join all this the
collapse in the automotive and related vehicle industry, the industry of capital goods
and electric and electronics sector that is much larger and more relevant than in other
industrial sectors of the country.
The situation of employment and income in Brazil has an undeniable downtrend.
Unemployment is rising. The economic downturn policy of Dilma Rousseff and
Joaquim Levy made it to the end of April with high unemployment to 8%. Brazil
remains the largest payer of interest from 40 countries worldwide. With the decision of
the Central Bank raise the basic interest rate (Selic) by 0.5 percentage points, from
13.25% to 13.75%, Brazil remains at the top of the ranking of countries with the highest
real interest rates (adjusted for inflation). Real interest rates that discount the projected
inflation for the next 12 months in Brazil are 5.23%. Second, comes India with real rate
of 2.93%. Third is China, with 2.84%, followed by Taiwan (1.78%) and Poland
(1.60%). However, speaking of nominal interest (not discount the inflation), Venezuela
appears first, with 18.87%, followed by Argentina (17.85%). Brazil is third in the
ranking of nominal interest (13.75%).
On the increase of wealth in Brazil it is important to note that this is the tenth country in
the world in number of millionaires. Exceeds (in rich) countries such as Spain and
Switzerland. Brazil is the second country in the world when considering the rate of
growth in rich, between 2013 and 2014. The number of Brazilian millionaires grew in
the period, somewhere around 350%. For comparison: in the US, still the highest
concentration of wealthy and ultra-rich, the growth was approximately 20%. What is
unbelievable is that there are still people who believe that inequality declined in Brazil
in the years of the PT government that is false. Reduced, if even decreased, the
difference between employees, but not between income from capital and labor [See
Clovis Rossi article Rico ri, mas não é à toa (Rich laughs, but not for nothing), posted
on the website <http: // www1. folha.uol.com.br/fsp/mundo/221512-rico-ri-mas-nao-ea-
toa.shtml>].
The chaos and complexity of the business environment in Brazil mean that
governments, companies and people feel a sense of being swept away by a hurricane
that permeates the entire political, economic and social. This means that to understand

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and manage a complex economic and social system we must think and act in complex
ways using concepts and practices at least comparable to the complexity of this system.
This is not the practice of the managers of the Brazilian economy that still uses outdated
methods of economic management system. The classical economics that, in the past,
offered a number of methods to understand reality and build economic and
organizational models no longer meet the needs of the contemporary era. We should not
continue adopting economic and organizational models in everything related to them is
handled isolated and disconnected from the whole.
*Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011),
Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012) and
Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV,
Curitiba, 2015).