Brazil’s Temer to Circle the World in Search for Investors
(Bloomberg) -- After keeping a low profile during the impeachment proceedings against Dilma Rousseff, her successor and former vice president Michel Temer has his bags packed and is ready to embark on a world tour as soon as her ouster becomes official.
Temer plans to leave for China to attend the Group of 20 leaders’ summit and meet with investors just hours after the impeachment process is expected to end late this month, according to a close aide. In September, he plans to attend the United Nations General Assembly in New York and then head in October to the summit of BRICS leaders in India, according to the aide, who asked not to be named because the schedule isn’t public.
It’s no coincidence that Temer’s first international trips as president will be to the world’s two biggest economies, according to a second government official, who also requested anonymity. The main objective is to attract investors and communicate to outsiders that Temer is Brazil’s legitimate leader, he said. The push to boost Brazil’s credibility comes as the country struggles to recover from a crippling recession and traumatic political crisis.
"There’s a lot at stake just getting out there and showing that Brazil is open for business again," said Eric Farnsworth, vice president of the Americas Society and Council of the Americas. "There’s been a period of time that Brazil’s been in political turmoil, and I think a lot of the international observers have been wondering when Brazil will get beyond that and begin looking forward."
Investors have largely welcomed Temer, who took over the top job in interim capacity in May when the Senate forced Rousseff to step aside during impeachment proceedings. Temer aides say they expect at least 60 Senators -- more than the necessary two thirds majority -- to vote in favor of permanently removing Rousseff at the end of the final trial, set to begin Aug. 25.
Since Temer took over in May, the real has appreciated 7.8 percent against the U.S. dollar in the biggest gain among Latin American currencies tracked by Bloomberg. The benchmark Ibovespa stock index has surged 9.5 percent.
For an in-depth look at some of Temer’s economic hurdles, click here.
Major economic challenges remain, however, as analysts expect gross domestic product to contract for a second straight year in 2016 amid double-digit unemployment and an expanding budget deficit. While consumer and industrial confidence has improved since Temer took office, Congress at times has been slow to approve government reforms that are designed to shore up fiscal accounts.
Temer will focus his efforts abroad on convincing leaders and investors that the worst is over for Latin America’s largest economy, according to the government official. Temer’s agenda could be extensive, as the October trip to India may include a stop in Japan. He also plans to attend the Ibero-American summit in Colombia at the end of that month.
This global tour is important for Temer to challenge claims from Rousseff and her Workers’ Party that the world doesn’t accept him as a legitimate leader, according to Marco Antonio Carvalho Teixeira, a political scientist at the Getulio Vargas Foundation in Sao Paulo. Rousseff’s last international trip as president was to the United Nations in April where she told foreign journalists that she is the victim of an illegal coup.
“The way Temer is received will be a good way to evaluate how the world perceives what’s going on,” Carvalho Teixeira said. “These trips will be the true beginning of his government.”
Temer will also need to explain to the Brazilian people why these foreign trips are needed to restore the country’s image, especially when it comes to expensive travel in a time of government belt-tightening, the government official said. While many Brazilians are in a forgiving mood following a successful Olympic Games in Rio de Janeiro, that goodwill may not last long, according to analysts at political consulting firm Eurasia Group.
The Games’ impact "will be limited as the political and economic situation remains challenging," analysts including Joao Augusto de Castro Neves wrote. "The Temer administration will still face a difficult political landscape in Brasilia."