Brazil Under the Bolsonaro Administration

On January 1, 2019, Jair Bolsonaro was sworn in as the new President of Brazil. On October 28, 2018, Bolsonaro defeated Fernando Haddad of the Worker’s Party 55.1% - 44.9% in a run-off.

Bolsonaro’s election comes amid a tumultuous time in Brazil. Government corruption is a major problem with President, Dilma Rousseff getting impeached in 2016 and former president Luiz Inácio Lula da Silva in prison for corruption. Da Silva was the front runner in this year’s election before being sent to jail. Brazil is also facing a slumping economy and rising crime rates, which all likely had an impact on the election results as voters pushed back against the “establishment.”

Many are comparing Bolsonaro’s rise to that of President Donald Trump’s, as both were able to position themselves as strong outsiders rallying against the media and establishment politics. Bolsonaro has been quite vocal about how he plans to govern differently. Among his initiatives, Bolsonaro wants to reduce the size of the government, increase productivity, and reduce regulations.

Bolsonaro comes into power with some lofty policy goals he hopes to achieve. Three of the main goals for the new administration are pension reform, privatization, and tax reform. Pension reform is a touchy subject in Brazil as currently, many people retire in their 50s and receive generous benefits from the government. As Brazil’s next legislative session is about to get underway, politicians are already discussing proposals to tackle pension reform. While it is still to early to tell, it is likely that the government will try to raise the retirement age by at least a few years, which would save the government money.

Bolsonaro also campaigned on the promise of pushing for privatization. Currently, Brazil has 418 state-owned enterprises (SOEs) - more than any country in the Americas - though some are no longer in use. Additional privatization would open Brazil up to increased foreign investment, especially from China, which has been investing heavily in Brazil over the past few years. Bolsonaro hopes that moves to privatize can help improve the country’s infrastructure. Privatization is a controversial topic in Brazil, so it remains to be seen just how much progress Bolsonaro can make on this goal.

Tax reform is the third main priority proposed by President Bolsonaro. Brazil is known for having a complex and burdensome tax system, so a main priority would be simplifying the process. A few different proposals are being considered and it is unclear at this point which one will be the most politically popular or achievable.

Throughout his campaign, President Bolsonaro often mentioned President Trump and his desire to improve Brazil’s relationship with the United States. It is possible that Brazil will look to negotiate a new trade deal with the U.S. in order to increase investment. The new Brazilian  administration will also likely look at ways to increase foreign tourism as another way to boost the economy.

How This Impacts Mobility

As the ninth largest economy in the world and a region with numerous workforce challenges, political and economic changes in Brazil will have an impact on global business and the mobility industry. While many details about Bolsonaro’s economic and immigration policies are uncertain, he has several ambitious policy goals and it is important to monitor new developments – as well as the outcome, should they come to pass.

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