Brazil is, so to speak, going through a period of uncertainty and obscurity. The presidential election will take place in a little over 3 months’ time and there is widespread apathy about the issue. An extemporaneous election in the state of Tocantins in June presented a glimpse of what may occur: 49% of voters did not attend or left their ballots blank. Half the state merely shrugged in regard to the dispute.
Currently, we are anesthetized by the World Cup and will only get back to normal, maybe in August. No important decision will be made by the markets before the election outcome. The dollar is approaching the 4 Real mark and we have already begun to experience the bad taste of high interest rates ahead.
At the end of May, truckers parked their trucks on the side of the roads and made us realize that they really can stop the country. Fuel did not reach the gas stations, the gas cylinders did not turn up for the “free delivery of Mr. Zé” and this alone was enough to leave the cities deserted for up to 10 days. The government yielded, lowered the price of diesel oil and gave another demonstration of its fragility. It left the doors open for other interests to call for state intervention on public prices.
The National Confederation of Industry said: “New paralysations at this moment are unacceptable. Everyone needs to take their share of responsibility to overcome this situation. The priority must be immediate restocking and acceleration of the discussion about the country’s structural problems,” the CNI said in a statement.
Two little words that tormented us in the past were resurrected – fixing and freezing. The government “froze” the price of diesel for 60 days and “fixed” freight rates.
Before the “Real Plan”, in 2004, the “New Republic” of José Sarney presented us with an inflation rate of 83% per month, the result of repressed prices and austere monitoring of repricing in supermarkets. The remedy that did not work for 30 years has just been used again. Total recklessness.
Until the world knows which way Brazil will go after the October ballot, nothing will happen. The country is closed for inventory.