Synthesis of the Brazilian Economy

BRAZIL ECONOMICS - Report 06 May 2024 by Alexandre Schwartsman, Cristina Pinotti, Paula Magalhães and Diego Brandao

OVERVIEW

ABUNDANCE OF ALERTS
After a month of exhausting and ultimately futile friction with Congress, a melancholic manifestation summoned for Worker’s Day was added to an extensive list of alerts that President Lula has been receiving about the efficacy – and the costs – of his governing strategy. The insistence on raising spending as a panacea for all the nation’s ills, against a backdrop of the challenging international scenario, has provoked instability in the market and increased uncertainty, hindering the Central Bank’s task in the coming months.

OUTMODED UNIONISM
“I don’t have the spirit to speak against strikes; I was born from strikes,” was President Lula’s comment referring to the work stoppages and slowdowns that have affected various sectors of the public administration, ranging from the Central Bank to IBAMA, passing through regulatory agencies and teaching institutions. The message is that those who advocate fiscal responsibility are mistaken, and the government’s response is to accept the claims of civil servants regardless of any analysis of the merit.

The same simplistic and retrograde tone marks the pantomime attempt to regulate the profession of app driver, based on a unionism model of the last century, which has become a governmental brouhaha. In line with one of Lula’s campaign promises, the bill sent to Congress would require payment of social security (INSS) contributions, maternity leave benefits, union representation and minimum earnings of R$ 32.10 per hour. It was received with protests from the category and faces resistance in Congress.

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