Friday 19 July 2019

Brazil's hard turn to right 'can revive its economy'

Oath to God: Jair Bolsonaro pledged to defend freedom and democracy. Photo: Reuters
Oath to God: Jair Bolsonaro pledged to defend freedom and democracy. Photo: Reuters

Raymond Colitt

Jair Bolsonaro swept to power in Brazil's presidential election, marking a hard turn to the right that promises to open up the resource-rich economy to private investment, strengthen ties to the US and unleash an aggressive crackdown on epidemic crime.

The former army captain saw off Fernando Haddad, a leftist former Sao Paulo mayor whose Workers' Party became synonymous with graft, winning 55pc of the vote to Mr Haddad's 45pc with almost all votes counted.

His supporters thronged public places throughout the world's fifth most populous nation, celebrating with flags, music and fireworks.

"This government will be a defender of the constitution, of democracy and of freedom," Mr Bolsonaro told a crowd of supporters in Rio de Janeiro. "This is a promise, not from a party, not the words of a man, it's an oath to God."

A little-known politician for almost three decades, Mr Bolsonaro (63) drew public attention with tough talk. He promised to suppress the nation's lawlessness by meeting violence with violence, insulted minorities and women, waxed nostalgic for Brazil's dictatorship and expressed doubts about the electoral process itself.

His unforgiving politics places him among nationalists such as Hungary's Viktor Orban, Rodrigo Duterte in the Philippines and Donald Trump in America, who called him after his victory was declared.

To many, however, Mr Bolsonaro is the best hope to revive an ailing economy.

An exchange-traded fund focused on Brazilian stocks climbed 11pc in Tokyo trading and an US depository receipt of Petroleo Brasileiro rose as much as 6.1pc in Germany.

Hari Hariharan, CEO at NWI Management LP in New York, which has been investing in Brazil since 1990, said: "A lot of global money is going to look to Brazil. If the fiscal situation is addressed, Brazil is going to be fantastic."

Mr Bolsonaro aims to thwart corruption and downsize a costly state by selling scores of state-owned companies.

He would cut corporate and individual taxes to kick-start the economy and push structural reforms such as capping pension spending and simplifying taxes.

All that helped drive a rally in Brazilian assets. The Next Funds Ibovespa ETF jumped 13pc in Japan early yesterday.

Alberto Ramos, an economist at Goldman Sachs, said Mr Bolsonaro's solid win gives him a strong mandate and "the market is likely to react positively".

Irish Independent

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