Synthesis of the Brazilian Economy

BRAZIL ECONOMICS - Report 06 Jun 2023 by Affonso Pastore, Cristina Pinotti, Paula Magalhães and Diego Brandao

The avalanche of failures in the domestic political sphere and in the country’s positions in diplomatic questions requires a rearrangement. The luck of expanding GDP will not last long, and the negative effects of the fiscal-monetary conflict will persist.

UNEXPECTED DEFEATS IN THE COUNTRY AND ABROAD
Confident that his political agenda, composed of nearly two dozen provisional measures (MPs), would be approved by Congress based on their intrinsic features, Lula devoted little time to meetings and negotiations with lawmakers. A study carried out by O Globo based on the official agenda indicated that as of the middle of May, he only met nine times with deputies and/or senators of allied parties, but in the same period he met with 30 foreign heads of state. The error in his evaluation of the correlation of forces in the political arena left him hard pressed at the end of May, requiring him to spend a relevant part of his initial political capital, without preventing relevant defeats. Nor did this focus on international affairs bear the expected fruit. His participation at the G7 meeting and the summit of South American leaders and his declarations about international themes have provoked huge disappointment and discomfort abroad. The failures of the executive branch, which embraced the agenda and methods of the PT, have favored an increase in the power of the legislative branch, which is more conservative and dominated by the Centrão coalition. Lula seems to be betting on help from the judiciary to govern during the remaining three and a half years of his term. Doing the opposite of Bolsonaro, who leveled regular attacks on the Supreme Court (STF) and Superior Electoral Tribunal (TSE), will not guarantee the success of his government, much less strengthen the country’s democratic institutions, which presupposes independence and harmonious relations of the three branches. The main risk is that he will become a new aspirant for entrenched power.

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