Brazil Pulse - The Temer Administration Was Considered Bad - September 2016

Consumer Confidence Index reaches 74 points and signals a gradual upturn. Perspective for the next 6 months, which were signaling small signs of improvement in the past readings, start to confirm.

The next few months should confirm the gradual recovery of consumption confidence, but not necessarily in politics. Temer’s administration still generates uncertainties about its ability to govern and the lack of a positive agenda can influence the mood of public opinion.

Context

Brazil goes on in the wrong direction. 

In September, Brazil was considered on the wrong direction by 87% of people, the same index that was obtained in August. This index, which seemed to be on a shy improvement trend, remained stagnant at a negative level.

This perception is explained by the lack of aggressive actions of the newly inaugurated Temer administration. In addition, the data from Pulso Brasil shows that there is some distrust about its ability in solving major issues of the country, as well as carrying on the necessary reforms.

The bad mood regarding the county’s direction is also related to a moral and institutional crisis through which we are going through: the support to 'Lava Jato' follows on at full speed and so is the disbelief in the politics and politicians, according to the data of the September’s Pulso Brasil.

There is an institutional and leadership crisis that negatively impacts the perception of Brazilians regarding the current situation. The crisis through which we have been going through in the last 3 years has worsened people’s quality of life, be it in terms of consumption, be it for public services, creating general dissatisfaction with the way things are in Brazil. 

The evaluation of Temer’s administration continues at negative levels.

In September, the Temer administration was considered bad or very bad by 45% of Brazilians (against 49% in August and 48% in July). Those who were not able to answer added up 16%, against 12% in August and 16% in July. The administration was considered “regular” by 31% of the population, the same level obtained in August. The positive evaluations (very good or good) remained at 8%. That is: the Temer administration continues to be poorly evaluated and unable to build a positive agenda so far.

However, the level of disapproval by area of performance has dropped significantly, which can make room for improvement of the current Government’s image, if the main problems of Brazil are well conducted and positively reflected on the life of the population.

It is worth noting that the major reforms on the agenda will demand an efficient communication strategy of the current administration, something that so far has fallen short. The public needs to understand how they will be impacted by these changes. The Government needs them (the public) to understand these changes, if they (Government) want to create a positive impact and win over their (public) support.

Economic context

Consumer confidence: today it is bad, tomorrow it will be better.

Consumer confidence has shown the first significant sign of recovery since Dilma Rousseff’s step down, reaching 74 points in September. In April, month in which the impeachment was voted in Congress, the Domestic CCI was 64 points - the lowest in the historical series.

Consumer confidence will continue on a growing trend in the coming months because of the more positive perception Brazilian have regarding all indicators that cover the perspective for the next 6 months, especially job stability. The results confirm the analyses and forecasts informed using Pulso Brasil’ data in recent months.

In addition, the quarterly report of the Central Bank foresees an inflation (IPCA) of 4.4% in 2017 and 3.8% in 2018, well below the 7.4 % forecasted for this year. The forecasts are also more encouraging for both the GDP and the drop in interest rates.

However, even if expectations for 2017 are better vis-à-vis 2016, the scenario will still present weaknesses both for the economy and for the political life of the country.