In Brazil’s capital, a well-known rodizio — an all-you-can-eat steakhouse — offers a steep discount for choosing only one type of meat; at an upscale Italian eatery, you can now pay for lunch in installments; at a soup kitchen, shop owners join the homeless for a free meal. Faced with fewer customers, restaurants are dropping their prices for the first time in 13 years. “Brazilians have had to change their habits and go to cheaper restaurants,” said Paulo Solmucci Junior, head of the country’s bar and restaurant association. “Traditional, important restaurants have closed and many are at risk. We were optimistic this year. But the economy let us down.”
A waiter delivers a drink at the now defunct Zuu restaurant in Brasilia.Photographer: Adriano Machado/Bloomberg
A recovery from the country’s worst recession ever has run aground as investors and consumers are whipsawed by the prospect that either the far right or far left will win the election in October, the most unpredictable since the return to democracy in 1985. Yet cutting back on Sunday night family pizza may be only the beginning. Public finances are in shambles. Draconian belt-tightening is inevitable regardless of who wins the election, says Raul Velloso, an economic consultant and specialist in public finances.
“The next president will be under pressure and if he doesn’t do the right thing, he’ll fall,” Velloso said in an interview. “All of them know that,” he said about the candidates.
If nothing is done, the country’s budget will burst next year (see chart above), breaking a constitutional spending freeze, according to finance ministry projections. At stake is the future of the second-largest economy in the Americas and the creditworthiness of $950 billion in federal government debt.