Hers to Lose....?

A very good morning to you.  I trust the week has treated you as it should and that a grand weekend stretches out ahead.

I decided to throw a very short second post out there, this week, after reading some articles about 2014 and the year's Presidential election.

A recent Ibope Poll showed President Dilma Rousseff winning one first round vote scenario for next October's election by a significant margin, polling 43% compared to her nearest rival at 14%.  All other first round scenarios also showed her winning easily.  All second round scenarios returned President Dilma as the victor with at least a 19 point lead.

The poll results rather suggest that the election is President Dilma's to lose....but is it really that cut and dried?

So much of what is important to the electorate and what brought them onto the streets last June comes back to money and the economy, the practical ability to deliver what the people are (rightly, in my view) demanding; not all, by ANY means, but a good deal, including tackling inflation and delivering quality social services to all groups within society.

Two much used political sayings come to mind.  Firstly, Harold Wilson's phrase that, 'a week is a long time in politics' (UK Prime Minister 1964-70 and 1974-76) and then James Carville's 'it's the economy, stupid' which he coined during President Bill Clinton's successful 1992 Campaign (Carville was a strategist for Pres Clinton and coined 'the economy, stupid' as a bullet point for Campaign workers, though the variation 'it's the economy, stupid' is more commonly used now).

If a week was a long time for Harold Wilson, then the year we have to run to the Brazilian election is one hell of a long time....particularly with the economy on the verge of either a recovery, or of further troubles that could condemn Brazil to struggle through the economic mire of very low investment, low growth, inflation, currency depreciation and other ills for years.  As much of the 2014 campaign is likely to be about the economy, or about social problems, the resolution of which will be largely dependant on a buoyant economy delivering sustained growth, Carville's bullet point is still right on the money.

As a result, one cannot help but be concerned by the run of articles in such as the Economist and from Forbes, Reuters and Bloomberg that raise serous doubts about the ability of the Brazilian Government to correctly grasp what is needed to arrest the decline of Brazil's once vaunted economy and relaunch it in more robust and sustainable form.  Most recently, Bloomberg reported that investors had 'never been more pessimistic' about President Dilma's policies and her ability to return the economy to the heady days of recent years.  Reuters had previously suggested that the medicine to cure Brazil's economic ills would have to include lower wages and increased unemployment....but doubted that any President would prescribe such medicine in an election year and Forbes has made similar observations..  The article went on to suggest that failure to do what is necessary next year may result in the illness turning from a short, sharp cold to a chronic malady.

Currently, the Government is holding to the prediction that inflation will be within the target band by the end of the year (the average for emerging markets is around 5%, but Brazil has been nearer to 6%) and recently announced a further reduction in the unemployment rate for October, hitting a 10 month low of 5.2% from 5.4% in September.  The official tone is hopeful, even confident, but they must be seen to actually deliver increased, stable growth that will act as the enabler for so much else that is needed and has been promised.

The balance between electorally popular policies and necessary measures to recover the economy (addressing supply side constraints and policies that produce excessive demand as well as acting to attract investment etc) will be a difficult one for President Dilma in an election year....even if she is resting on an apparent cushion of a double figure points lead over her nearest Presidential rival; and this is without weighing the potential impact of issues such as the potential for further civil protest, the need to be seen to fight endemic corruption, the need to reform policing (about which, more in the next post I think) etc.

With seemingly no credible rival, the election may be President Dilma's to lose......but......

Thanks for looking in on the Blog today.  I trust I have made some sense in my struggle with economic issues; I am anything but an economist!

The next post should be on Wednesday and I hope you will look in again then.

Dave