Brazil Unemployment Crisis Worse In 20 Years

Not too long ago, probably around 2012 if I remember correctly, Brazil's unemployment rate was absolutely China-like. I'm talking full-employment of 4.5%. Investment banks in New York were actually hoping for layoffs. Brazilians were getting paid so well and so much and no one needed a job. Something had to give.

Five years later and something's given way alright. The population of Brazilians without a job is now equal to the city of London and Rio de Janeiro, combined, at a little more than 14 million according to the Brazilian Institute for Geography and Statistics (IBGE). Unemployment has gone from single digits to mid double digits. It's gone up around two percentage points this year, a year in which Brazil is said to be coming out of its two year's long recession.

Unless Brazil's beleaguered president Michel Temer and his party allies in the Social Democratic Party (PSDB) do not cut this number down by next January, they will suffer a defeat in the October 2018 general election. And here's why. Firsts, the last time unemployment was so bad in Brazil aws in 2003. It was around 11%. Back then, the country was on default watch, the International Monetary Fund was funding the government, and a failed California-style electric power deregulation policy was blamed for rolling blackouts in parts of the country. People were so ticked off with the state of the economy that they placed their bets with left wing candidate Luiz Inacio Lula da Silva of the Workers' Party. Lula's third time running for office gave him his victory lap.

On Sunday, one of Brazil's biggest polling firms said that Lula wins in every scenario against every candidate if he was running for office today.

Forbes | Kenneth Rapoza

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