Government Fears Turmoil in the Streets May Affect the Economy

07/01/2013 - 10h34

After a sharp decline in popularity, the priority of Brazil's president, Dilma Rousseff, has to be "to lower the temperature" in the streets to restore the feeling of order in the country and to prevent the economy, which is already feeling the impact of the protests, from suffering greater damage and growing less than 2%.

That is the private evaluation of presidential advisors. They believe the Datafolha survey that showed a 21% decline, to 30%, in the intended votes for Rousseff in the presidential election, reflects a "feeling of lack of leadership and control" as well as a bad moment for the economy.

The government cannot and does not want to supersede the demonstrations, but it needs to end the actions of rowdies and vandals in the country.

In that area, the evaluation is that the government hasn't yet shown a "strong sign of authority" and needs to do so in the coming days. An advisor said the president needs to offer help to the governors. A last resort is using the Armed Forces.

Ministers received calls from businessmen concerned with the depredations and looting in the stores. There has even been a request for the federal government to send in the army.

An advisor said the riots in the main cities of the country have two negative effects on the economy.

In the short term, sales have already declined in the capital cities. Another consequence, in the medium term, is alarming investors who are preparing to participate in the bidding processes for highway and railway concessions in the second half of the year.
The negative impact of the protests tuned on the warning signal in the government, as they are occurring at a delicate moment for the economy, with the high dollar generating more inflationary pressure.

These two factors have led the government to fear G.D.P. growth below 2% this year, below the government's expectations of 3%.

Translated by THOMAS MUELLO

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