Lula On a Mission

Many Brazilians believe Lula is running Brazil into the ground. Others believe he might not be a saint, but he is popular as a politician because he pays more attention to the under privileged and worries about the poor, and hence bringing those in the worse position out of poverty.

In 2023, 59 million Brazilians lived in poverty, which represents the lowest rate in the IBGE historical series, which began in 2012. In 2023, 8.7 million people escaped poverty.

Since President Luiz Inácio Lula da Silva took office in January 2023, the Brazilian economy has shown mixed signals. In 2023, Gross Domestic Product (GDP) grew by 2.9%, driven by a robust agricultural harvest, a recovery in the services sector, and a strengthening labor market. This growth surpassed the first-year performance of previous governments, such as Jair Bolsonaro, Michel Temer, and Dilma Rousseff's second term.

However, challenges remain. Annual inflation reached 5.26% in March 2025, exceeding the Central Bank's target of 4.5%. To contain inflation, the base interest rate was raised to 14.25%, which could slow economic growth. Furthermore, the real reached a historic low, surpassing the mark of six reais per dollar, reflecting investor skepticism regarding the government's spending containment measures.

In fiscal terms, the government aims to achieve a primary surplus by 2026, despite the challenges. Finance Minister Fernando Haddad acknowledged the difficulty, but reaffirmed the commitment to the target. However, measures such as tax exemption for incomes under 5,000 reais raise doubts about fiscal discipline.

In short, although the Lula government has achieved economic growth and improvements in the labor market, it faces significant challenges related to inflation, fiscal policy and investor confidence. The sustainability of these advances will depend on the government's ability to balance economic stimulus policies with fiscal responsibility.

Take care!

Prof. Carl Boniface

Source: most of the information taken from ChatGPT