No doubt you have read the headlines: Brazil is in crisis.
Without question, 2016 has not been a good year thus far for Brazil. Any recent discussion of the country is now expectantly peppered with tales of political scandal and corruption, economic woe, and ultimately, overall dread.
August nears and Brazil’s proverbially unpaved road leading up to the 2016 Summer Olympics gets shorter and shorter. While the impeachment agonies of now-suspended President Dilma Rousseff are dominating international headlines, rank-and-file Brazilians are priming themselves for a new potential tsunami of drug violence and quite possibly widespread, violent political protests and unrest as the Olympiad fast approaches.
But are things really as bad as they might seem? One need only look at the lessons learned from the Brazil-hosted 2014 World Cup tournament to understand that perhaps the negative hype surrounding the upcoming Olympics may later be found to have been alarmist, self-defeating, and overblown. It is well worth remembering that the 2014 World Cup was billed as a tragedy in the making, yet now, the event is almost universally heralded as a victory for the Brazilian state.
Regardless of the Games’ operational outcome, the event will commence this summer amidst a backdrop of political and economic turmoil. Brazil’s rampant corruption is generating heavy political turbulence that has polarized the country, deteriorated investor sentiment, and only continued to push the country deeper into economic recession. And after thirteen years of the Worker’s Party’s leftist rule, and a resulting shift in political sentiment to the right, there are many unknowns on the road ahead–not just in the upcoming months, but after the Olympics and through 2017.
Amidst a sea of uncertainty, one thing is clear: Brazil’s evolving situation will have weighty, long-term consequences for investors at home and abroad, all of whom are waiting and watching for what will happen next.
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