As expected, far-right candidate Jair Bolsonaro won the runoff of the Brazilian presidential election last Sunday with more than 55% of the votes, beating opponent Fernando Haddad (workers’ party of PT) by 10 million votes. Our new report shows that his pro-business policy platform is the “least worst” choice for corporates, triggering a small confidence boost while potentially leading to the creation of 90 000 additional companies in 2019 compared to 2018. Yet Bolsonaro’s economic program lacks details, some proposals are unrealistic (severe austerity could cut -1.2pp of GDP growth in 2019) while governability issues will remain. Lastly, the president’s economically liberal policy platform could be unstable. Hence, in the context of an underwhelming outlook for economic growth in Brazil and shrinking global liquidity, corporates are not home and dry yet, as borrowing costs could increase in the medium term. Mind sectors whose debt is at risk: retail, auto suppliers, textiles, food and energy.
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Weekly Export Risk Outlook 31 October 2018