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Optimism fading, Brazil protests put leaders on alert
June 18, 2013 / 8:47 PM / 4 years ago

Optimism fading, Brazil protests put leaders on alert

RIO DE JANEIRO (Reuters) - When more than 200,000 protesters took to the streets across Brazil on Monday night, they demanded a dizzying array of improvements - from halting the fast rise of prices to cleaning up government corruption.

If one message stood out, it was that Brazilians are no longer willing to accept the rosy outlook that politicians in Latin America’s biggest country have been painting for years.

Until recently, Brazil was one of the world’s most envied economies. An export boom, growing domestic demand and ambitious social welfare programs for much of the past decade led to average annual economic growth exceeding 4 percent and lifted more than 30 million Brazilians from poverty.

But vast economic differences still divide Brazil.

A sluggish economy, rising inflation and the poor quality of public services are prompting optimism to wane. Brazil may have made big strides, but daily life for most people remains a gritty, frustrating ordeal compared to what they imagine when considering the country’s elusive potential.

“The fantasy that the country is paradise, a marvel, is over,” wrote Eliane Cantanhede, a columnist for the Folha de S. Paulo newspaper, on Tuesday.

The implications of the message are far from clear.

No one political party is the target of the protests, which were initially sparked by an increase in bus fares but became a groundswell of other complaints. No single politician is the object of the wrath aimed at local, state and federal figures alike.

Still, it is remarkable that the protests broke out at all.

Unemployment remains near record lows. Brazil has not seen public turmoil on this scale since far worse economic problems and a corruption scandal combined to topple a president in the early 1990s. The generation driving the protests, mostly young first-time activists rallying through social media, has long been derided for its political apathy.

GETTING AHEAD OF THE MESSAGE

With more protests planned, officials are trying to get ahead of the message, which demonstrators know is resonating all the more as the country puts on a series of high-profile events in the coming years.

In addition to an ongoing international soccer tournament and a forthcoming visit by Pope Francis, Brazil will host the 2014 World Cup and the 2016 Summer Olympics.

Though the country normally shines during big celebrations, particularly when it comes to soccer, the more than $3 billion cost of World Cup stadiums has given demonstrators a price tag to latch onto as they criticize a lack of investment in roads, health clinics and security, a growing concern because of a surge in violent crimes in many cities.

Brazil's President Dilma Rousseff attends a ceremony announcing Brazil's new mining bill at Planalto Palace in Brasilia June 18, 2013. REUTERS/Ueslei Marcelino

President Dilma Rousseff, who just last week denounced growing criticism of Brazil’s economic outlook as “terrorism,” on Tuesday praised the protesters for being mostly nonviolent and vowed to heed their concerns.

“My government hears the voices clamoring for change,” she said in a speech in Brasilia, where demonstrators danced on the roof of the national Congress building on Monday.

The success of the past decade, she added, “created citizens who want more and deserve more,” conceding the need for better hospitals, schools, transportation and the many other demands made by the demonstrators.

Delivering more will be hard, though, at a time of economic uncertainty and in a noisy, unwieldy democracy where Rousseff’s own congressional allies often torpedo her simplest initiatives.

Her rivals are already jockeying to leverage the dissatisfaction. Speaking to reporters on Tuesday, Aecio Neves, a senator and the expected candidate for the opposition Social Democratic party in next year’s presidential race, said the protests “make clear that the flush Brazil celebrated in the official propaganda ... does not exist.”

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Now in her third year in office, and planning an expected bid for re-election, Rousseff still enjoys strong support, especially among lower-income voters. Most working-class Brazilians still credit the ruling Workers’ Party and Rousseff’s predecessor, Luiz Inacio Lula da Silva, for hard-won gains.

For that reason, however, Rousseff also has much to lose.

The leftist party for years has successfully contrasted the boom of the Lula administration with the economic volatility before he took office. Lula himself has accused the opposition of having a “short memory” and pointed out that they, who now criticize annual inflation of 6.5 percent, were in power when prices were rising at exponentially higher rates.

ECONOMIC PESSIMISM

But the pitch is a hard sell at a time with the economy is flagging. After growth of 7.5 percent as recently as in 2010, Brazil last year grew by less than 1 percent and appears on track for another disappointing year in 2013.

“Until recently, the promise of continuity was a good thing,” said Rafael Cortez, a political analyst at Tendencias, a consultancy in Sao Paulo. “Now there will be more of a need to present real and new solutions for a whole new set of problems.”

The changing mood mirrors a sentiment already displayed by foreign investors, whose enthusiasm for Brazil’s prospects fueled a tide of investment during the boom.

They have increasingly lost patience with policies that they believe seek to micromanage the economy instead of tackling longstanding problems, including high taxes, bad infrastructure, red tape and regulatory uncertainty.

Ratings agency Standard & Poor’s has said it could downgrade Brazilian debt. The real, Brazil’s currency, lags behind those of other emerging markets and has weakened by more than 10 percent from a March peak against the dollar.

“There are a whole series of structural issues that are going to limit Brazil’s ability to go back to any sort of boom anytime soon,” said Neil Shearing, chief emerging markets economist at Capital Economics in London.

Additional reporting by Maria Carolina Marcello; Editing by Todd Benson and Mohammad Zargham

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