On Sunday, millions of Brazilians took to the streets to call for the ouster of President Dilma Rousseff, who is thought to have cooked the fiscal books in 2014.
She’s not yet implicated (directly anyway) in the long-running Carwash probe, but some think that may change soon as the investigation seems to get closer and closer to her officer with each passing week.
But it’s not just corruption that Brazilians are fed up with.
The economy is in shambles and a PT party proposal to use more than 30% of the country’s FX reserves to fund infrastructure projects risks sparking capital flight and jeopardizes debt service capacity, Barclays wrote, in a note out today.
On Monday we also got a look at the monthly real GDP tracker and wouldn’t you know it, IBC-Br missed by a mile, printing at -0.61 M/M and -8.1% Y/Y - the latter was the worst reading on record. As we first noted last summer, Brazil is stuck in stagflation. Not only is output plunging, but inflation is running in the double-digits.
Nearly every other economic indicator is in the doldrums as well, but if you want one chart which shows why Brazilians are really mad, look no further than the following, which vividly depicts the country’s stagflationary nightmare:
We’ll leave you with the following passage from Goldman’s Alberto Ramos who always does a nice job of cataloguing everything that’s wrong in the country:
We expect the economy to continue to face strong headwinds from exigent financing conditions, high inflation, significant labor market deterioration, higher levels of inventory in key industrial sectors, higher public tariffs and local and federal taxes, high levels of household indebtedness, weak external demand, soft commodity prices, political uncertainty and depressed consumer and business confidence.
No wonder they are mad...