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Brazil: The 2017 political road map


After a tumultuous 2016 for Brazil, the New Year is shaping up to be just as volatile for the country. A weak economy, still-rising unemployment, popular anger at political impunity and a looming tsunami of yet more corruption revelations set the stage for rising public discontent against an already scandal-hit government. Moreover, President Michel Temer’s most important and unpopular structural fiscal challenge – pension reform – lies ahead.

Key judgments

  • While Brazil’s summer holiday period could grant the embattled President some respite – aided by a welcome 75bps cut by the Banco Central this week – major events to monitor in Q1/17 are the elections for top legislative posts and the likely ratification of the Odebrecht plea bargain by the nation’s highest court (STF).
  • The timeline for the cases against the 2014 presidential results at the nation’s highest electoral court (TSE) is another vital indicator; it could be sped up if there are more mass street protests.
  • Although the fear of political chaos will help Temer, the President has little margin for error; the risk of his early exit is likely to peak in H1/17, after which the odds will gradually decline as the clock ticks down to the 2018 presidential election.
  • Given that the Congress is set to begin debating the pension reform in earnest from March onwards, the Lower House vote is likely to take place mid-year and the Senate vote in H2/17.

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