NO BALLOONS OR confetti descended on Jair Bolsonaro as he claimed victory in Brazil’s presidential election on October 28th. Instead, he gave his first speech as president-elect from his flat in Barra da Tijuca, a beachside neighbourhood of Rio de Janeiro, via Facebook Live. That was fitting. Social media brought Mr Bolsonaro, a venom-spewing far-right congressman, from the political fringes to the presidency of the world’s fourth-biggest democracy.
Now Brazilians are wondering what their choice will mean. Mr Bolsonaro has a mandate, having beaten his rival in the run-off, Fernando Haddad of the left-wing Workers’ Party (PT), with 55% of the vote (though a record number of people abstained). Voters elected Mr Bolsonaro, a former army captain, to cure the triple plague of corruption, rising crime and an economic slump. They are prepared to go along with his radicalism, in part because he does not look or sound like the centrist and leftist politicians who caused those problems. It is less clear that Mr Bolsonaro’s programme—a mix of economic liberalism and social conservatism—will command support on the street and in congress once the implications sink in.
In the days following Mr Bolsonaro’s victory his economic plans have been to the fore. Ignoring his authoritarian leanings, the financial markets cheered his impending victory in the hope that he will slash spending, especially on pensions, simplify taxes, privatise state firms and eliminate red tape. Such reforms are needed to avert a debt crisis and raise Brazil’s growth potential. The stockmarket index and the real rose by 10% in the month leading up to the election as it became clear that Mr Bolsonaro would win.
The early signals give cause for both hope and worry. Mr Bolsonaro seems ready to hand vast authority to his economic guru, Paulo Guedes, a pro-market economist with no political experience. He is to lead a new “economy super-ministry” that will subsume the ministries of finance, planning and industry. The elimination of the industry ministry suggests that Mr Guedes plans to resist lobbying from businesses that enjoy being shielded from foreign competition. The government will “save Brazilian industry, despite Brazilian industrialists”, he says.
Mr Bolsonaro wants the current president, Michel Temer, to enact a pension reform, which was initially voted down by congress, before he leaves office. That will require a constitutional amendment, which must pass by three-fifths majorities in both houses. Once in office, Mr Bolsonaro may keep the current central-bank boss, Ilan Goldfajn. That would reinforce the markets’ optimism.
But the Bolsonaro team is also flashing warning signs. Its economic and political sides do not seem to talk to one another, says Zeina Latif of XP Investimentos, a broker. Onyx Lorenzoni, the president-elect’s future chief of staff, denies that he backs Mr Temer’s pension reform. Mr Bolsonaro’s enthusiasm for privatisation does not extend to Petrobras, the state-controlled oil company, or to electricity generation.
He will take office on January 1st with considerable backing in congress. His confusingly named Social Liberal Party is the second-biggest in the lower house. Thirteen of the 27 state governors-elect, including centrists, have declared support for him (see Bello). But Mr Bolsonaro has said he will not offer congressmen pork and patronage as past presidents have done. Without that, support for reforms could crumble. Fights over public workers’ salaries and the minimum wage, to which much government spending is linked, will rage early in Mr Bonsonaro’s term.
Such uncertainties have led to divergent forecasts for Brazil’s economy. Tony Volpon, an economist at UBS, a bank, thinks it could grow by 3% a year if Mr Bolsonaro governs deftly. Citi, also a bank, has cut its growth prediction for 2019 from 2.5% to 2.2%, saying the government will reform less than the market expects.
The more trouble Mr Bolsonaro encounters in enacting his economic plans, the more likely he is to emphasise the nastier side of his agenda. Encouraging police to kill suspected criminals will give the impression that the government is doing something about crime. Mr Bolsonaro can soothe evangelical voters by campaigning against supposed gay influence in schools.
He offered the ministry of justice and public security to Sérgio Moro, a judge who leads the Lava Jato (Car Wash) corruption investigations. That is another dubious crowd-pleaser. Appointing Mr Moro will deepen suspicion on the left that Lava Jato is a politically inspired witch-hunt. (He locked up Luiz Inácio Lula da Silva, a former president from the PT who otherwise might conceivably have won the election.) Mr Bolsonaro dropped his promise to withdraw from the Paris climate agreement but may merge the environment ministry into the agriculture ministry. Environmentalists would be appalled. They have less political clout than farmers.
Though markets cheered his election, Mr Bolsonaro and his allies reminded Brazilians who value democracy why they fear him. He threatened to withdraw government advertising from media that behave in “undignified” ways. A group of former army officers that has been advising him submitted a list of 25 people, many with military backgrounds, for the transition team, half the spots available.