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20 Sep 2016

Political transition in Brazil - what to expect

Privatizations, reforms in the education and welfare system, revised growth expectations is what's coming for Brazil next

Since the new government took office in Brazil, a series of measures have been announced in an attempt to ensure the country goes back on a growth track. Here is a summary of what has changed or what is expected to change under the leadership of the new president, Michel Temer.  

- Michel Temer's first major reform and key priority is the social security/welfare system. He wants to increase the retirement age from 60 to 65 years old. The reform is expected to be sent to the Congress by the end of the month and the voting is expected for seven months from now.

- The new Brazilian president wants to increase the daily working hours allowance from 8 to 12 hours, as well as allowing the formal hiring of employees by hour or productivity. Maximum working hours per week would be 48, from the current 44 hours. The measure has generated criticism and fears that employees would lose rights, but the president has explained the goal of the new legislation is to formalize work relations with employers who already work on longer shifts, such as doctors, nurses and workers at construction sites.

- Brazilian bank Itaú has revised its growth expectation for the Brazilian economy for 2017 from 1% to 2%. For 2018, expectation is of 4% growth, on the bank's perspective. The official government perspective is of a 2,5% growth for 2018.

- A multibillion dollar privatization plan has been launched, with auctions expected to take place on the first quarter of 2017.  The government will sell operating licenses for airports in the cities of Porto Alegre, Salvador, Florianopolis and Fortaleza. It also plans to sell rights to operate federal roads in the center-west and south region. Six power distributors owned by state-run power holding company Eletrobras in the north and northeastern regions will also be privatized, in an attempt to bolster private investments.