Despite Temer Corruption Indictment, Government Calm and Carrying On

Signals indicate the unpopular president will weather criminal charges and press on with economic reforms in the near-term

brazil temer

A recent lack of notable activity in Predata Government and Economy signals suggests the president and his unpopular economic reform agenda may weather blockbuster corruption charges. On May 17, the leak of a recording of President Temer discussing bribes with a meatpacking tycoon caused Predata Economy and Government volatility signals to surge, reflecting increased attention to the scandal and heightened expectation that the revelation could sink Brazil's embattled president and his economic reform agenda.

But six weeks later, when Temer was formally indicted for corruption, the Economy signal registered no change and the Government signal rose only modestly. Reaction in financial markets has mirrored that in Predata's signals: Both the Sao Paulo-based BOVESPA stock exchange and the Real/USD rate fell on news of the May 17 leak but registered little reaction to the indictment.