Business confidence boost unlikely if Brazil's Rousseff impeached: poll

Mon Apr 18, 2016 4:38pm EDT
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By Silvio Cascione

BRASILIA (Reuters) - The probable impeachment of Brazil's President Dilma Rousseff is unlikely to be followed by an immediate rebound in business confidence or currency gains, a Reuters poll showed on Monday.

Vice-President Michel Temer, set to serve out Rousseff's term until 2018 if the president is ousted, will probably rule over a period of chronically high unemployment and budget deficits, the poll projected.

He will probably lack political support to approve major reforms in Congress but has alternative measures to reinvigorate Brazil's depressed economy, economists said in a survey taken a day after Rousseff lost a crucial impeachment vote in the lower house of Congress.

"Things in Brazil are much more problematic than it seems," said Pedro Tuesta, senior Latin America economist at 4Cast. "A change of government is a necessary condition but it is not enough, by a large margin."

Twenty economists at major banks and research firms participated in the poll.

Half of them expect business confidence to lift off record lows only in the fourth quarter of the year. Unemployment, which has risen sharply as Brazil sank into a deep recession, will start to drop only in 2018 or beyond, according to 11 of them.

"There won't be a V-shaped recovery in confidence," said Rodrigo Melo, chief economist at Icatu Vanguarda.

Temer will probably be unable to plug Brazil's budget deficit over the next couple of years, the poll added. Eleven expect a surplus only in 2018, but seven of the economists polled see deficits until 2019 or even after that.   Continued...

Brazil's President Dilma Rousseff looks on during signing of federal land transfer agreement for the government of the state of Amapa at Planalto Palace in Brasilia, Brazil, April 15, 2016. REUTERS/Ueslei Marcelino