Within 15 seconds of the semi-final of the men’s football tournament at the Olympics kicking off, Neymar was bearing down on goal. Brazil’s star striker was tackled by Honduran goalkeeper Luis Lopez, but the ball ricocheted between the men and rolled into the net.
Yet, the crowd inside the famous Maracana stadium in Rio de Janeiro was unsure whether to celebrate. The tackle had left Neymar in pain and in need of medical treatment. Fears rippled among the spectators who thought they were witnessing a repeat of the 2014 World Cup, an event Brazil also hosted. Back then, the team suffered a humiliating 7-1 defeat to Germany, a match Neymar missed through injury.
That World Cup loss has subsequently been seen in the country as the start of two years of national decline. Brazil’s footballing pre-eminence shattered, it was then shaken by a political crisis, a deep recession and a corruption scandal.
The mood is shifting. A first victory in the Olympic men’s football tournament — the gold medal that Brazilians desire above all others — could presage a broader revival. Neymar returned to the field and led a 6-0 rout of Honduras, scoring his second goal from the penalty spot in stoppage time.
“The victory will lift spirits but the next step will be harder,” said Rejane Lima, a football fan from Santos, the former base of Pelé, Brazil’s greatest player.
A gold medal would come at a crucial turning point for Latin America’s biggest economy. After suffering its deepest and longest recession on record — a 3.8 per cent contraction last year and an estimated 3.2 per cent decline this year, Brazil’s ailing economy is beginning to show signs that it is at least stabilising.
An upcoming vote on whether to impeach suspended President Dilma Rousseff, who was suspended from office in May, is set to ease the country’s political stalemate, raising the chance that congress will approve the fiscal reforms needed to bring back growth.
Four months after the lower house voted to begin impeachment proceedings against the leftist leader — ostensibly for breaking budget laws but really over anger about the recession and corruption — the senate is set to make its final decision at the end of August, barely a week after the Olympics closing ceremony.
Rafael Cortez, a political scientist at the Tendências consultancy, puts the chances of Ms Rousseff’s impeachment at about 80 per cent — a scenario that would lend Michel Temer’s market-friendly interim government more legitimacy to be able to pass unpopular reforms.
“Even the suspension of Dilma helped improve expectations, so much so that consumer and industry confidence indices are already showing improvement — there is a feeling that the worst is over,” says Mr Cortez.
Brazil’s National Confederation of Industry said this week that its industrial confidence index has turned positive for the first time since March 2014, moving above the 50-point mark to 51.5 points in August from 47.3 points last month.
Mining companies and the rest of Brazil’s extractive industry, which has also benefited from the effect on exports of the weaker local currency, are particularly positive, as are larger companies with more access to funding, says José Augusto Fernandes, CNI’s director of policy and strategy. Companies in the construction sector, which is heavily-involved in the bribery and kickback scandal at state-oil company Petrobras, are more negative but sentiment is still improving as the interim government adopts more orthodox and liberal economic policies.
“We were heading into the abyss under the previous government of Dilma so just the change in economic policy significantly reduces the risk of the country suffering a catastrophic event,” says Luciano Rostagno, chief strategist at Banco Mizuho do Brasil.
Henrique Meirelles, Brazil’s new finance minister, has moved to reduce the country’s gaping budget deficit that ballooned to more than 10 per cent of gross domestic product last year, while central bank president Ilan Goldfajn is battling to anchor inflation expectations.
However, even if Ms Rousseff is impeached, Brazil’s new government will have a very small window to pass meaningful reforms, analysts warn.
Even the suspension of Dilma helped improve expectations, so much so that consumer and industry confidence indices are already showing improvement — there is a feeling that the worst is over
– Rafael Cortez, Tendências consultancy
Obtaining a quorum in Brazil’s lower house will be significantly reduced until the country’s municipal elections in October with 15-20 per cent of lawmakers running for positions and many more spending time in constituencies campaigning for family and friends, according to Eurasia.
In December Brazil will then shut down for its long Christmas break, which often extends to carnival celebrations at the end of February. Later in the year, infighting in congress will probably increase ahead of the 2018 presidential elections, says Carlos Melo, a political scientist at Insper, a university in São Paulo.
While Mr Temer may be able to pass a proposed constitutional amendment to freeze future public spending, much-needed changes to Brazil’s bloated pension system are expected to be painfully slow. “They need to at least discuss the retirement age — reforms in Brazil are always incremental but they need to at least show that things are beginning to change,” says Mr Melo.
Then there have been the Rio games, which have suffered numerous glitches, from athletes being robbed to empty seats in stadiums. But Brazil’s Olympics have largely avoided the organisational disaster some had feared.
The progress of its men in the Olympic football tournament reflects the changing fortunes. Neymar was booed by his own fans after goalless draws against lowly South Africa and Iraq. But a winning run to the final has rekindled enthusiasm.
Brazil’s Seleção, the nickname given to the national team, still face major obstacles to earn redemption. They face the team it has come to fear most — Germany — in Sunday’s final.
For the political classes too, the real test will be producing results on the economy regardless of the outcome on the pitch. Ms Lima, the Brazil supporter, said: “In spite of all the festivities around the games, I don’t see a depoliticisation of people. Brazilians have learnt to separate sport from politics.”
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don’t cut articles from FT.com and redistribute by email or post to the web.