Given the decline in Brazil’s fortunes in the past two years, President Dilma Rousseff has pulled off a striking political coup by persuading voters to re-elect her, albeit with a reduced majority. The markets, however, do not appear convinced.
Her economic record since 2012 has been weak, to put it diplomatically. Although battered by global economic winds, India and China are nowhere close to the technical recession Brazil is now experiencing.
Inflation has crept above the 6.5 per cent target set by Ms Rousseff’s government. Having experience hyperinflation in the 1980s and 1990s, Brazilians are highly sensitive to this indicator. Last year inflation was behind the rising cost of public services, above all transport; the increase in fares in São Paulo and Rio were a leading cause of the protests that shook the Brazilian elite.