Synthesis of the Brazilian Economy

BRAZIL ECONOMICS - Report 30 Oct 2023 by Affonso Pastore, Cristina Pinotti, Paula Magalhães and Diego Brandao

Fiscal discipline doesn’t sit well with either Lula or the Centrão parties. Without a government policy to put the country on the path to sustainable economic growth, with his popularity sinking and dependence growing on the Centrão to win approval of any measures in Congress, Lula has abandoned fiscal moderation, as indicated by his argument that no difference exists between a fiscal deficit of 0.25% and 0.5% of GDP in 2024. The country seems fated to reap higher inflation and lower economic growth, under guidance of a government that has not learned from the errors committed in the past.

HARVEST OF BAD NEWS
The actions of Lula after his return to the scene has frustrated any hope of a change in his erratic and egocentric behavior. In a breakfast with journalists, he offered a menu replete with embarrassingly simplistic claims that do nothing to help the country. By pulling the rug from under Minister Haddad, who had been striving for measures able to generate – or at least pursue – fiscal discipline in 2024, Lula made it clear that he and the Centrão are pursuing their own interests rather than those of the country.

His convalescence from hip surgery, which caused virtual paralysis of various action fronts of the executive and legislative branches, was marked by a strong harvest of bitter fruits. The dubious attitude of Lula and the entire PT with regard to Hamas displeased the majority of the Brazilian population, which solidly supports Israel against the unacceptable terrorist attack of October 7th. Problems generated by organized crime factions and private militias have been castigating the people of Bahia and Rio de Janeiro, with only a tepid response from the federal government. The give-and-take negotiations for influential executive positions in exchange for congressional support, carried out in broad daylight, have reinforced the image of fragility of the executive branch in face of the insatiable Centrão parties, which are testing the limits of republican democracy.

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