Political Outsiders May Win if Brazil Is Divided, Meirelles Says

(Bloomberg) -- Outsider candidates may prevail in Brazil’s 2018 elections if the political center is divided, Finance Minister Henrique Meirelles said in an interview at Bloomberg’s headquarters in New York.

The 72-year old former central bank governor said that it was unsurprising that leftist former president Luiz Inacio Lula da Silva was a candidate again, but that the emergence of the "extreme right" was a new development. A majority of Brazilians are centrists and their candidate has not yet been defined, he added. Asked about his own presidential ambitions, he said it was "too early" to talk about a possible candidacy.

Meirelles has staked his reputation on austerity measures aimed at restoring investor confidence in Latin America’s largest economy. In the interview, the finance minister said that Brazil’s economic recovery was gaining strength and no longer relied as much upon the actions of Congress. He also looked ahead to a vote on a crucial but unpopular pension reform bill, which he expects to take place next month. Pushed once more on his plans for 2018, he said, "I am focused on making Brazil recover. If that happens we will think about the next steps."

Speculation is rife that the trained engineer may utilize his increased visibility to mount a bid for the presidency next year. Last week, lawmakers from the PSD party told reporters that they would back Meirelles as their presidential candidate. The finance minister later downplayed the idea, saying via his Twitter account that he’s focused on his current job, while notably failing to rule out an interest in the position.

Though elected as a federal deputy in 2002, Meirelles never took office. Instead, former President Luiz Inacio Lula da Silva tapped him for central bank president. Since stepping down from that role in 2010, Meirelles has held numerous private sector roles including chairman of J&F Investimentos SA, the holding company that controls the world’s largest meat producer, JBS.

As the chief architect of President Michel Temer’s economic policy, Meirelles has been on the front-lines of the government’s political battles, helping to coax lawmakers into backing strict limits on public spending last year, and now arm-twisting deputies over pension reform. Temer sees those measures as crucial to reining in a budget deficit and laying the groundwork for sustainable growth.

After years of gloom, Brazil is currently enjoying a spate of positive economic news. Gross domestic product expanded more than forecast in the second quarter, economic growth expectations are on the rise, unemployment has dropped and annual inflation has plunged to an 18-year low. The benchmark stock exchange is hovering near a record high and the currency is steady.

Political Outsiders May Win if Brazil Is Divided, Meirelles Says

Still, consumer confidence levels remain low amid the lingering effects of recession and daily stories of corruption and misuse of public funds. In just the past month, the head of JBS was jailed, Temer was hit with a second round of criminal charges and federal police presented the media with jaw-dropping photos of their biggest ever cash haul, seized from an apartment allegedly used by one of the president’s former aides.

The slew of criminal allegations is seen fueling the rise of political outsiders and populist candidates in next year’s elections. A poll published on Tuesday showcased the continued rise of Jair Bolsonaro, a right-wing lawmaker and former army captain whose known for his hardline stance on law and order and incendiary public statements.