Grading my 2019 Predictions – Brazil


I have a hard time believing that 2020 marks my 57th year from the issue of my first Carteira de Estrangeiro.  One would think that after a lifetime, I would have a grip on what is going and what might happen and while sometimes I have an inkling worth sharing, there are times when we are wide of the mark.  With this, it is time to look back at my 2019 forecast with its hits and misses.  Here is the link (

I divided the predictions into 3 groupings: Political, Economic and Social.

Politics: 1) My first prediction had to do with Foreign Minister Ernesto Araujo and I stated that it was likely that his crusade against all things global and leftist would likely not last a year and he would be replaced.  His campaign continues but his rhetoric seems increasingly irrelevant.  Personally, I have nothing against an individual espousing strong religious belief and standing up for them.  However, as Foreign Minister, one expects results.  Instead, both Bolsonaro and Araujo have been caught off guard by Trump’s mercurial decisions on imposing/removing/reimposing and then removing again.  Araujo would like to take credit for a European Union/Mercosur accord, but the Amazon burn threw this off track.  The fires stained Brazil’s image and Araujo has not helped putting them out.  He has only clamored about Brazilian sovereignty over the Amazon and this would not even be contested except for what European countries see as unapologetic mismanagement.  Brazil has yet to move the Embassy from Tel Aviv to Jerusalem as promised.  Nor has Brazil achieved anything in Venezuela where Itamaraty’s chief has supported ousting Maduro to no effect.  Finally, Brazil started by alienating the new government in Argentina but has since become a bit more pragmatic and it is actively supporting the more right-wing interim President of Bolivia who took over after Evo Morales had to resign.  So, while still heading Itamaraty, Araujo has been largely ineffective and mostly ignored by Finance Minister Guedes.

2) I thought Sergio Moro would be embarrassed enough to step down.  He did not but his stature, while still high among a majority of the Brazilian public, has definitely been tarnished as he has had to accept President Bolsonaro’s put downs.  His latest comeuppance was having to accept the creation of a special “citizen’s judge” as a new instance for case review.  In reality, this decision may help Bolsonaro’s sons and associates further delay and put off their corruption cases.  On a positive note, Brazil’s 60 thousand plus homicides have actually declined substantially even though the government has facilitated acquiring firearms.  On the other hand, police killing have broken records as security forces feel unleashed and see reduced likelihood of being held accountable.

3 & 4) These predictions were correct as Social Security reform did pass in a somewhat watered-down version with a long phase in period and with the military and judges, prosecutors and justice officials preserving most of their special benefits.  While the least will be most impacted, investors, entrepreneurs and businesspeople almost universally favor the reform, and this represents a major political shift in Brazil.

5 & 6) Point 5 dealt with some wishful thinking that Bolsonaro could be impeached.  This will not come about under circumstances even if his family members are somehow condemned for corruption.

General Mourao continues as Vice-President and will remain so throughout the whole term.  In this sense, the political institutions seem solid and there are no obvious military movements to replace the Captain with a higher-ranking officer.

Economics: 1) After years of corruption, mismanagement and recession, I was optimistic that the economic cycle would kick in and I predicted a 2.2% growth rate.  Certainly wrong!  Confidence continued to lag and mismanagement in many areas under the President’s direct control dragged on and the economy in spite of promises by Minister Paulo Guedes only expanded at about 1%.

2) Inflation.  Here I was off the mark as inflation went down as lack of confidence led to lackluster growth and inflation going down instead of up.  The year 2018 ended with inflation of less than 4% versus my prediction of 6% plus.

3) Interest rates: Wrong again: The benchmark SELIC rate sits at an historic low of 4.5% and I predicted it would have been around 8%.  In looking at whatever optimism and achievements might be expected in 2020, this low interest rate is universally cited as a positive factor and has indeed favored the government as it has reduced the interest burden as the government is the largest borrower.

4) Foreign Direct Investment (FDI): Correct.  I stated that Brazil would attract over 60 billion in FDI by the end of November 2019, Brazil’s Central Bank registered 69.1 billion dollars.  The largest share of this FDI went into investments in the Oil & Gas business targeting mainly offshore operations.  In this prediction, I made reference to Bolsonaro’s ideological distrust of the Chinese who he had accused of “buying Brazil”.  Over the year, he has changed his posture and is now more favorable or perhaps more realistic in being more welcoming to the Chinese as investors especially in oil and gas, energy distribution, and infra-structure.

5) Inequality: The statistics for 2019 are not in so my affirmation using the Gini index is inconclusive.  However, education is fundamental for inequality reduction and the Ministry of Education has been adrift and tainted by the ineffectiveness of its leadership.  While unemployment has dropped to just under 12%, the informal sector is growing as witnessed by the return of engraxates, mainly minors, who work the bars at night providing shoeshines to samba beats.

Social Policies: 1) Violence.  I am pleased that I was only partially right here.  The number of homicides in Brazil have fallen remarkably from over 60 thousand per year to less than 45 thousand in 2019.  Most of this drop can be attributed to an accommodation amongst the major gangs who run the drug trade and other illegal activities in Brazil’s big cities but increasingly in mid-size urban areas as well.  The bad part and I was right about this are that murders committed by the police are indeed over 5000 per year and there is the idea of a carte blanche.

2) Indian and Quilombola lands:  Brazil was in the negative news mainly for the major upswing in the destruction of the Amazon caused by fires.  At the same time, violence, land invasions, illegal logging and mining and other illicit activities resulted in the death of Indians.  The main public agencies, i.e. FUNAI, for protecting tribes and tribal lands have been gutted.  Support for Quilombola communities through NGO’s and government policy have been stopped and or blocked.

3) Brazil did not withdraw from the Paris Climate Agreement, but it did help throw a wrench into the Madrid COP-25 climate meeting.

4 & 5) Bolsonaro’s popularity, mayoral elections and the opposition.  The President’s approval ratings have fallen from over 70% to about 40% in just over a year.  Still a major share of the population strongly supports the Bolsonaro administration.  Opposition is active, but the PT even with Lula out of jail, is no longer the force it once was.  Lula has failed to think beyond his own person and project.  As a result, a new leadership on the left and/or center has failed to gain traction.  The mayoral elections this year will provide a point of focus and perhaps the beginning and strengthening of a more democratic and socially liberal governance. 

6) Infra-structure: Brazil’s Ministry of Infra-Structure set itself apart from as a technically competent and well guided sector of the government.  Its focus has been on roads, ports, airports, railroads and improving, through public-private partnership and outright privatization, Brazil’s lagging infra-structure.  In the 2019 predictions, I referred specifically to sewage infra-structure noting that approximately 50% of Brazil’s households are not connected to basis sanitation systems.  Some small progress has been made in this area in the past year, with work on the legal framework for privatizations and partnerships.  However, the basic problem of lack of public resources or the political will to address the problem still exists.

7) Evangelicals and Minister Damaris.  Yes, evangelical influence continues to grow, and no Damaris was not replaced.  As a matter of fact, she is the most or the second most popular, after Sergio Moro, in Bolsonaro’s Cabinet.  Her connection to poorer women without a university or even high school diploma has been on a sentimental and visceral basis where she has tapped into deep socially conservative roots.  In this she has not been tainted by suspect actions and family corruption as has the President.

Finally, I stated that “in spite alienation and anomie, Brazilian society will not break down like Venezuela nor will it revert to a right-wing military dictatorship.”  Certainly, this is correct, in spite of, and perhaps because of President Bolsonaro’s dictatorial penchant.  He cannot govern alone.  His support among the military is tenuous at best and as a result, Brazil will continue on its muddling path.

My grade for the 2019 predictions: a B with a little condescension.

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