Polarizing Lula sees Brazil’s economy improve in 1st year
RIO DE JANEIRO — Brazilian President Luiz Inácio Lula da Silva likes to boast that he had a good first year after returning to the job. The economy is improving, Congress passed a long-overdue tax reform bill, rioters who wanted to oust him are now in jail, and his predecessor and foe Jair Bolsonaro is barred from running for office until 2030.
Still, Lula has struggled to boost his support among citizens and lawmakers.
Some setbacks, including a series of votes by Congress to override his vetoes, signaled that Lula’s future could be less productive in a Brazil almost evenly split between his supporters and Bolsonaro’s.
“Brazil’s political polarization is such that it crystallized the opinions of Lula and Bolsonaro voters beyond the economy,” said political consultant Thomas Traumann, the author of a recent bestselling book on Brazil’s political divisions. “These groups are separated by very different worldviews, the values that form the identity of each group are more important than food prices or interest rates.”
Lula took office Jan. 1, 2023, after a narrow victory over Bolsonaro in October 2022. At the beginning of his four-year term, only one-quarter of Brazil’s Congress sided with him. Business and opposition leaders feared that Lula had gone too far to the left.
A riot led by Bolsonaro supporters destroyed government buildings in the capital, Brasilia, on Jan. 8 and more turmoil looked certain.
Former Finance Minister Paulo Guedes, among other conservatives, forecast that Lula’s policies would make Brazil’s economy soon turn as sour as those in crisisridden Argentina and Venezuela.
“Six months to become Argentina. One year and a half to become Venezuela,” Guedes said.
Fast forward to December.
Brazil’s economy is set to grow 3% instead of the 0.6% expected by market economists. Inflation looks controlled at about 4.7% on a yearly basis, slightly above projections but far from the double digits of recent years. The unemployment rate fell to 7.5% in November, 1 percentage point below the day Bolsonaro left office.
The Sao Paulo stock exchange hit record levels in December, rising above 134,000 points for the first time in its history.
Brazil’s real currency is also rising against the U.S. dollar.
“We needed to get our house fixed (in 2023),” Lula said in a meeting at the presidential palace Dec. 12. “And now I say get ready . ... The Brazilian economy will not let anyone down.”
Yet some polls have shown unchanged support for the president, at 38% to 40% since January 2023. The numbers didn’t pick up even after the announcement of a higher minimum wage in 2024, the buildup of Bolsonaro’s legal woes or Brazil’s return as a player in foreign affairs under Lula.
About a third of Brazilians consider Lula’s presidency about average and another third deeply dislike the way he governs Latin America’s powerhouse economy, which rose once again to the top 10 biggest in the world after years of sinking.