Carlos Caicedo, Senior Principal Analyst, Country Risk, reflects on two of the most surprising aspects of the protests: the country’s economic prosperity and the middle-class status of many of the protesters. He also looks at the use of social media during the protest, and discusses the implications for the 2014 elections. This video accompanies a full article on the changing nature of protests published in the Fall 2013 edition of the Country Risk Quarterly.
Protest in Brazil - Drivers and Implications. Published: Oct 18, 2013
What were the most surprising aspects of Brazil's protests in June?
What was very surprising about the protests in Brazil that brought to the street 1.5 million people in June, were two key features in my opinion. The first one is that this happened in the middle of significant prosperity - 10 years of prosperity. The second feature is the main drivers of this protest were the emerging new middle class. When you have a country that has been growing fast, in which real wages are increasing, in which unemployment has reached record low levels, you wouldn't expect such a significant amount of protests. And this is what exactly happened in Brazil. Indeed, in terms of economic growth, prosperity and employment, the country is nearly in full employment, real wages have increased over the last 10 years.
In terms of participation from the social class point of view, it was the emerging middle class [who was] the main beneficiary. So it's significant that this happened and it's surprising. And nonetheless, the reason why this emerging middle class took to the street was because although they definitely benefit from economic prosperity, at the same time they pay heavy taxes and they are fed up with very bad provision of public services and this is what explains basically this protest in June.
How critical was the use of social media during the protests?
Well the heavy use of social media in this protest was a significant new feature. There is no question that this time and unlike previous protests, there was a new element in the protest as a logistical tool to organise [the] protests. The Brazilians' heavy use of Facebook, heavy use of Twitter….both of those were used heavily during the protest to brain-storm ideas, but also logistically to organise a different demonstration in different cities. And it worked like a clock. People were able to move from one place to another on time and they took by surprise the authorities and the security forces.
What are the implications of these protests for Brazil going forward?
I will sum up these on three main areas. The first one, the Presidential elections in 2014, the second one the development and investment in infrastructure for the World Cup and for the Olympic games, and the third one the likely impact of this on policy making.
Regarding the first one, the Presidential elections, there is no question that the protest damaged the popularity of President Rousseff - it plummeted from 70 per cent before June to 30 per cent later that month. It has recovered a little bit now but it doesn't mean that she is out of the race or that she doesn't have a chance. In fact, the opposition parties were also targeted by the protesters. Congress is not as popular as Rousseff and the Establishment in general does not have a very high rating generally. So, she still has a chance to recover and win the elections.
Secondly, infrastructure could be a beneficiary from this protest because one of the main grievances of the protestors was the poor provision of public services, particularly urban transportation. The government is giving a special priority to urban transportation so we are going to see an acceleration of infrastructure investment in Brazil and this will be beneficial for the country and beneficial for the World Cup and the Olympic games.
Thirdly, the implication for policy-making is not going to be significant but we would like to highlight the fact that most likely the government is going to increase public spending in the run up to the election in 2014. Therefore there is going to be a relaxation of fiscal discipline but not significantly large. It means that the macroeconomic stability that has characterized Brazil will likely stay in place although the fiscal accounts or the fiscal deficit is going to be wider but not by a large margin.
