Trump of the Tropics

German business unfazed by Brazil’s new President Jair Bolsonaro

Second round of the presidential election in Brazil
Is there a human behind the mask? Source: Reuters

German managers in Brazil are laissez-faire about the change in leadership in Brazil after far-right lawmaker Jair Bolsonaro won Sunday’s presidential run-off with 54 percent of the vote.

Mr. Bolsonaro, the so-called “Trump of the Tropics,” is a notoriously divisive figure, whose hardline approach has deeply divided Latin America’s largest country. Like US President Donald Trump, the 63-year old former army captain forgoes political correctness and polarizes with offensive, often racist and misogynistic comments. Not to mention his propensity to praise Brazil’s former military dictatorship.

The news of Mr. Bolsonaro’s victory was fiercely celebrated in the streets and by Brazil’s financial markets. Bovespa, Brazil’s leading index, gained more than 5 percent. However, Bosch’s CEO in Brazil, Wolfram Anders, sees the positive stock market move as speculative, not sustainable.

But German executives in Brazil are hopeful that Mr. Bolsonaro’s election will end a period of instability. “If almost 60 percent of Brazilians choose a candidate, then you have to respect this decision,” said Mercedes-Benz Brazil President Philipp Schiemer. “Bolsonaro is more convincing to Brazilians than his opponent was on issues like anti-corruption, security and, most importantly, the economy.”

Surprisingly, few German managers see Mr. Bolsonaro’s growing popularity as a sign that Brazil is shifting to the right. It appears that working with Trump’s administration equipped German managers to respond with optimism to however political tides turn — so long as the economy improves.

Ahead of the election, Deutsche Bank posted on Twitter that “… the neo-liberal Jair Bolsonaro is the preferred candidate of the markets.” Twitter users revolted, criticizing the lender for meddling in local politics, especially in favor of candidates wanting a military government. The struggling German bank quickly issued a statement in response to clarify its stance.

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Give him a chance

As with the election of The Donald, many executives are saying Mr. Bolsonaro deserves a chance. “Democracy must be able to endure a candidate like Bolsonaro,” said Martin Duisberg, vice-president of the German-Brazilian Chamber of Commerce in Sao Paulo.

Brazil’s democratic institutions have proven stable, many said, downplaying Mr. Bolsonaro’s ability to undermine these institutions. A belief that the media, congress and judiciary system will keep him in place was a sentiment that was also echoed and carried by voters who may not personally like him but prefer him to Fernando Haddad, the Workers’ Party candidate.

Deliver on those promises

German diplomatic circles are equally blasé and are awaiting Mr. Bolsonaro’s first moves as president. Reducing the budget deficit through pension and tax reform tops the list of necessary reforms, according to Mercedes’ Schiemer. Without economic reforms, things will get worse for the country – direct foreign investment already fell 22 percent in the first half of 2018, according to the UN’s Conference for Trade and Development.

“Brazil is increasingly less suitable as an export platform because industry is no longer competitive,” said Mr. Anders of Bosch.

Investors, German or otherwise, currently prefer Asia.

Alexander Busch has been reporting from Latin America for Handelsblatt for over 20 years. Christine Coester adapted this story into English for Handelsblatt Global. To contact the author: alexander.busch@terra.com.br

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