Once Step Closer to Impeachment

Amid a deepening recession, falling stock prices, and decreased market confidence, political instability will further worsen Brazil's stance in the international economy over the coming months.

As discussed in a previous post, the Petrobas Oil Scandal in Brazil has led some politicians calling for Rousseff to step down--or for her impeachment.

On Wednesday December 2, 2015, Eduardo Chuna, Speaker of Brazil's lower house, officially launched the process for impeachment. In Brazil, an impeachment proposal requires at least a two-thirds majority for voting deputies, or 342 of the 513 votes. All stakeholders are aware of the gravity of Brazil's current position. Even Chuna has noted this will be a “backwards step for democracy.” However, allowing Rousseff to remain in power without any consequences to her involvement would also be damaging for confidence in Brazil's political system.

IMPACTS & RISKS

1. Uncertainty in policy changes if leadership switches could increase risk exposure in certain industries with heavy regulation. It could also be a benefit, depending in how power/influence is resettled if Rousseff is impeached.

2. It is unknown how this crisis will impact the government’s ability to respond effectively to the recession--meaning things to worsen before improving.