Impeachment in Brazil: a complex scenario for political and economic instances

RIO DE JANEIRO - Aug. 25, 2016 - PRLog -- The impeachment of the president of Brazil, Dilma Rousseff, is almost over. The last stage of the proceedings is scheduled to begin later this week of August. Therefore, the completion of this complex situation, which has lasted more than eight months, is close at hand.

Despite the low possibility to reverse the situation, the suspended president and her allies are using the latest features to avoid deposition. Recently, they sent a letter to the Inter-American Commission on Human Rights of the Organization of American States with a request for the agency to intervene in the case.

Today begins the judgment of Rousseff in the Brazilian Senate. The head of state confirmed she is attending the trial and is willing to respond to questions posed by senators and also by the president of the Supreme Court, Ricardo Lewandowski.

This might be the harbinger of a possible transformation in the Brazilian political and economic scenario. The impeachment is almost inevitable, so the eyes turn to the consequences of its confirmation. Government officials believe that if Michel Temer assumes the presidency effectively, the Brazilian economy can regain the confidence of investors.

In the financial market, however, remains the fear about the future of one of the largest economies in South America. Although many seek explanations, determine the impact of the impeachment is still something very hard to do.

Rio 2016 seen as a provisional solution

Brazil is already experiencing an economic downturn for a few years now. The problem escalated after the 2014 presidential elections, which re-elected Dilma Rousseff, and intensified after the opening of the impeachment process, at the end of the last year. The volatility of the market influenced by Brazil's situation also emphasized since then.

Many people, especially economic experts believe that the South American country will need at least two years to return to the path of recovery. Despite the caveats, an event may bring beneficial effects to Brazilians: hosting the Olympic Games of 2016 (https://pitchengine.com/pitches/779eef8d-366c-443b-8490-c...) https://pitchengine.com/pitches/779eef8d-366c-443b-8490-cc36777be342.

Criticism about Brazil hosting a sports event of this magnitude during a recession is not unfounded. But in the current situation, it can bring positive results. The expectation is that there is a short-term stimulus that might mitigate the Brazilian economic decline.

However, the benefits can be very localized and insufficient to impact the whole country. This is mainly due to the fact that Brazil is very large and that the capital generated by the Olympic Games will be possibly concentrated in the city of Rio de Janeiro.

Financial Market look forward to good news

Estimates reflect on the economy as a whole, but special attention is given to the Stock Exchange. It is expected that with the conclusion of the impeachment process, there would be an increase in the flow of investments directed to Brazil in the short term.

In the medium and long terms, the picture may be more complex, since much depends on the voting of fiscal measures and their real economic impact. Thus many believe tax reforms to be a factor crucial to boost foreign investment in the country.

Finished this complicated political chapter, another expectation is related to the flow of capital in Brazil and the dollar price. With the rise of the Real compared to other emerging currencies, it is expected that the exchange rate reaches the level of R$ 3.00.

The dollar decrease, which has accumulated about 20% since the beginning of the year, demonstrates an optimism for the near future, but the possible economic changes can only be felt with the end of the impeachment rictus.