National Growth

National growth is known as GDP which stands for Growth Domestic Product and has become widely used as a reference point for the health of national and global economies.

GDP measures the monetary value of final goods and services. That is, those that are bought by the final user, and produced in a country in a given period of time. When GDP is growing, especially if inflation is not a problem, workers and businesses are generally better off than when it is not.

So, the question I asked myself recently is how is the GDP in Lula's government? At the beginning of writing this blog I couldn’t find any concrete answers online. However, later on in my report there is a hint. However, in the last 20 years until 2022 according to the consultancy firm MB Associates based in Brazil, there has been an average growth of 2.2% per year. The second government of Luiz Inacio Lula da Silva (2007-2010) had the highest average growth since the 1990s, at 4.6% per year.

The calculation in the Bolsonaro period considers the following GDP data: 1.2% in 2019, 3.3% drop in 2020, 5% recovery in 2021, and 3% projection for 2022. To conclude the results the numbers were added and divided by the number of years that the president had been in power.

GDP had an average annual growth of 1.5% under Jair Bolsonaro, with a strong impact from the Covid-19 pandemic in half of the period. In 2022, the last year of Bolsonaro's term, the country advanced 2.9%. During the Dilma era (2011-2016), the country practically didn’t grow with the annual average increase of just 0.4% GDP.

Considering full 2022, the GDP grew 2.9% easing from a 5% growth in 2021. The services sector jumped 4.2% and utilities 10.1% amid more favourable fees, while the manufacturing sector contracted 0.3%, the mining one 1.7% due to lower iron ore extraction, and the farm sector went down 1.7%. Meanwhile, household spending increased 4.3% and public expenditure rose 1.5% as former President Bolsonaro boosted social expenses ahead of the election. For 2023, forecasts from a central bank poll point to a 0.8% growth.

I think this comes down to the high annual base rate established at the central bank of 13.75% (Economic Misconception) which was set in mid-2022 during Bolsonaro’s mandate. Bolsonaro's ultimate plea to gain votes in the running up months to the election also contributed. Such a high rate to drive down inflation clearly has an impact on spending.

Have a terrific day!

Prof. Carl Boniface