Nearshore Americas

Brazil’s Stock Market Suffers as Rousseff Wins Re-election

Brazilian President Dilma Rousseff has been re-elected, but the country’s stock market and its currency plunged to new lows in response to her election.

Rousseff won Sunday’s run-off election by a whisker, claiming 52% votes to her rival Aécio Neves’ 48%.

Amid the economic uncertainty, rumors are flying that Banco Bradesco SA Chief Executive Officer Luiz Trabuco will become Brazil’s next finance minister.

International investors appear nervous because they fear that Rousseff ‘s re-election will mean the continuation of the economic policies that have pushed Latin America’s biggest economy into recession.

Brazil’s benchmark equity index Ibovespa tumbled more than 4% in early morning trade on Monday, while the Real currency dropped to its lowest valuation in years.

According to one Bloomberg report, the equity market has shed more than $500 billion in stock value in the past few months, due to a variety of factors including inflation, overspending and fears that Rousseff would be re-elected.

Brazil’s economy has been slowing over the past few years, largely due to rising inflation and unemployment. Last week analysts cut their 2015 growth forecast from 1.1% to 1.04%.

Hosting this year’s FIFA World Cup and the 2016 Olympic Games was supposed to boost the Brazilian economy, but despite several stimulus programs and the government’s huge investment in infrastructure, Brazil’s economy has worsened rather than improved.

While on the campaign trail, Neves had promised to push down inflation and put the economy back on track.

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But Rousseff’s populist programs, such as the Bolsa Familia, seem to have played in her favor. She secured many votes in the poorer north where the Bolsa Familia allowance has reportedly lifted millions out of poverty.

Before becoming the country’s first female president in 2011, Rousseff, from the Workers’ Party, was chief of staff to former President Lula da Silva.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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