Brazil Reelects Rousseff Despite Economic Slowdown

The incumbent Workers’ Party president prevails over her liberal challenger despite a recent economic slump.

President Dilma Rousseff of Brazil, October 26, 2014
President Dilma Rousseff of Brazil, October 26, 2014 (Ichiro Guerra)

Brazil’s incumbent president, Dilma Rousseff, narrowly won reelection on Sunday. With more than 99 percent of the votes tallied, she had prevailed over her liberal challenger Aécio Neves with 51.6 percent support.

Rio de Janeiro’s O Globo newspaper pointed out that Rousseff’s margin of victory was the tightest since Brazil returned to full democracy in 1989. Four years ago, she won 56 percent support.

The news agency Reuters reported that Rousseff had convinced voters that “her party’s strong record of reducing poverty over the last twelve years was more important than a recent economic slump.”

Whereas Neves, representing the centrist Brazilian Social Democracy Party, drew support from mainly middle class and costal urban voters disillusioned with the incumbent’s inability to deliver higher growth and better public services, Rousseff successfully reminded a majority of voters her Workers’ Party had lifted more than thirty million Brazilians from poverty and reduced unemployment to record lows.

Rousseff’s camp also persuaded many voters that Neves would get rid of the immensely popular Bolsa Família social welfare program. He insisted he wouldn’t but his party is still seen as elitist and uncaring in large parts of the country.

The liberal Folha de S. Paulo newspaper listed the many economic policy challenges Rousseff will face when she starts her second term in January.

The federal budget has been in deficit for several years, leading investors to charge higher interest rates for government debt. To reverse the trend, the government could contain social spending but that might harm growth and would certainly create political tension within Rousseff’s ruling coalition. “Another option is to raise taxes which would have even more averse side effects.”

Brazil also has a trade deficit, making it vulnerable to fluctuations in the global market. To mend this imbalance, the country needs to raise production but that is held back by some of Rousseff’s policies, including her lack of infrastructure investments and erratic meddling in the private sector.

Finally, inflation has been creeping up and the central bank has been reluctant to interfere, fearing that higher interest rates will depress consumption and raise unemployment. Rousseff would have to let the central bank operate more independently to stem inflation, now at 6.6 percent.

Rousseff has promised to tame inflation and modernize infrastructure but a list of campaign promises put together by the Zero Hora newspaper, based in Porto Alegre, shows her priorities are improving the sort of public services Brazil’s new middle class is yearning for, including better access to education and health care.