Brasil’s economy improves during Lula's first year back

RIO DE JANEIRO

Brazilian President Luiz Inácio Lula da Silva likes to boast he had a good first year after returning to the job.

The economy is improving, Congress passed a long-overdue tax reform bill, rioters who wanted to oust him are now in jail, and his predecessor and foe Jair Bolsonaro is barred from running for office until 2030.

Still, the 78-year-old leader has struggled to boost his support among citizens and lawmakers. Some major setbacks, including a series of votes by Congress to override his vetoes, signaled that Lula's future could be less productive in a Brazil almost evenly split between his supporters and Bolsonaro's.

“Brazil’s political polarization is such that it crystallized the opinions of Lula and Bolsonaro voters beyond the economy,” said political consultant Thomas Traumann. “These groups are separated by very different world views, the values that form the identity of each group are more important than food prices or interest rates.”

Lula took office on Jan. 1, 2023, after a narrow victory over Bolsonaro in October 2022. At the beginning of his four-year term, only one fourth of Brazil's Congress sided with him. Business and opposition leaders feared Lula had gone too far to the left.

Former Finance Minister Paulo Guedes, among other conservatives, forecast Lula's policies would make Brazil's economy soon turn as sour as those in crisis-ridden Argentina and Venezuela.

Brazil’s economy is set to grow 3 percent this year instead of the 0.6 percent expected by market economists.

Inflation looks controlled at about 4.7 percent on a yearly basis, slightly above projections but far from the double digits of recent years. The unemployment rate fell to 7.5 percent in November, one percentage point below the day Bolsonaro left office.

The Sao Paulo stock exchange hit record levels in December, rising above 134,000 points for the first time in its history. Brazil's real currency is also rising against the U.S. dollar.

All that brought back the optimistic, keen-to-travel-abroad Lula who had been missing during almost a decade of personal gloom.

Yet some polls have shown unchanged support for the president, at between 38 percent and 40 percent since January 2023.

The numbers didn't pick up even after the announcement of a higher minimum wage in 2024. 

About a third of Brazilians consider Lula's presidency about average and another third deeply dislike the way he governs Latin America's powerhouse economy, which rose once again to the top 10 biggest in the world after years of sinking.

Lula's supporters are at home, but Bolsonaro's are still taking to the streets.

Though not as numerous as in the recent past, the few thousand protesters asking Congress to impeach Lula on corruption allegations have shown the resilience of the far-right leader's political base.