NEW YORK: Brazil may be on the road to recovery. Wednesday's Senate vote to impeach Dilma Rousseff should lend incoming President Michel Temer the impetus to push unpopular measures that will cement recovery in 2017.
But there's one big caveat: the country's lawmakers. Latin America's biggest economy is in its worst downturn since records began more than a century ago, hit by a commodity-price bust and Rousseff's statist incompetence. But there are signs of an upturn.
GDP data released on Wednesday showed the economy shrank for a sixth quarter in a row in April to June, down 3.8 percent from a year earlier. However, investments were up 0.4 percent, showing a first quarterly increase after two and a half years of contraction, and industrial output has also edged higher.
Consumer confidence rose for the fourth straight month in August to its highest since January last year, and business confidence indicators are also more positive. Federal tax collection in July improved from previous months.
The government, whose economic team is led by respected former central bank chief Henrique Meirelles, interprets this to suggest growth will return in the fourth quarter.
It now sees GDP shrinking just 3 percent this year, down from 3.8 percent in 2015, and has raised its 2017 forecast to 1.6 percent growth from a prior expectation of 1.2 percent. It sees inflation almost halving next year to 4.8 percent.
Crafting a sustainable recovery, though, means Temer and his team must address structural issues in the economy. He has already made a start, proposing a multi-year cap on public spending, which will require amending the constitution.
He has also pledged to reform the country's ruinous pension system, wants to weaken obligatory spending requirements on education and health and will seek to reduce the state's role in exploiting the country's crude oil reserves. Temer, 75, is a master of the dark legislative arts.
However, the politicians who happily voted to impeach Rousseff are a fractious and hypocritical bunch.
One-third of the Senate are facing probes for graft, fraud or other crimes.
Not many will be fans of Temer's austerity measures. Winning their support will probably involve diluting the most controversial proposals.
Temer has two years to do what he can.
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