Brazil’s economy improves during Lula’s 1st year, but the country remains divided

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RIO DE JANEIRO (AP) — Brazilian President Luis Inácio Lula da Silva likes to boast that he had a good first year back in office. The economy is improving, Congress approved a long-delayed tax reform bill, the agitators who wanted to overthrow him are already in jail, and his predecessor and enemy Jair Bolsonaro was banned from running for public office until 2030.

In any case, the 78-year-old president has struggled to increase the support he enjoys among citizens and legislators. Some harsh setbacks, including a series of votes in Congress to override his vetoes, suggest that Lula’s future could be less productive in a Brazil virtually divided equally between his supporters and Bolsonaro’s supporters.

“The political polarization in Brazil is such that it crystallized the opinions of Lula and Bolsonaro voters beyond the economy,” said political consultant Thomas Traumann, author of a best-seller on the country’s political divisions. “These groups are separated by very different views on the world; The values ​​that form the identity of each group are more important than food prices and interest rates.”

Lula assumed the presidency on January 1, 2023 after a narrow victory over Bolsonaro in October 2022. At the beginning of his four-year term, only a quarter of Brazil’s Congress backed him. Business and opposition leaders feared that Lula had leaned too far to the left.

Government buildings were destroyed in the capital Brasilia in a riot led by Bolsonaro supporters on January 8, 2023, and more unrest seemed certain to follow. Former Finance Minister Paulo Guedes, among other conservatives, predicted that Lula’s policies would soon cause Brazil’s economy to decline as much as those of Argentina and Venezuela.

“Six months to become Argentina. A year and a half to become Venezuela,” Guedes declared in an interview.

Brazil’s economy is forecast to grow 3% in 2024 instead of the 0.6% predicted by market economists. Inflation appears controlled at approximately 4.7% annually, slightly above what was forecast but far from the double digits of recent years. The unemployment rate fell to 7.5% in November, one percentage point below the day Bolsonaro left the presidency.

The Sao Paulo stock market reached record levels in December, rising above 134,000 points for the first time in its history. Brazil’s real is also rising against the dollar. All of this made Lula once again optimistic and inclined to travel abroad, aspects of his personality that were absent during almost a decade of personal dejection.

“We needed to fix our house (in 2023), put things in order,” Lula said during a meeting at the presidential palace on December 12. “And now I say: prepare yourselves. Next year, the Brazilian economy is not going to disappoint anyone.”

However, some polls have shown unchanged support for the president, between 38% and 40% since January 2023. The numbers did not rise even after the announcement of a higher minimum wage in 2024, the accumulation of Bolsonaro’s legal problems nor Brazil’s return to its role as a leading player in foreign affairs under Lula’s government.

About a third of Brazilians consider Lula’s presidency to be average, and another third deeply dislike the way he governs this powerful Latin American economy, which has returned to its ranking among the world‘s top 10 after years of decline.

Lula’s supporters are at home, but Bolsonaro’s supporters continue to take to the streets.

Although not as numerous as in the recent past, the few thousand protesters calling on Congress to impeach Lula on corruption charges have shown how resilient the far-right former president’s political base is.

In June 2023, Bolsonaro was banned from running for public office again until 2030, after Brazil’s Supreme Electoral Court determined that he abused his power and spread unfounded doubts about the country’s electronic voting system. .

Engineer Eduardo Carlos Santos, 73, believes Brazil’s economy recovered thanks to Bolsonaro’s work. A devout evangelical, like many of the former president’s supporters, he says there is a cultural war against conservatives and that leftists should have no place in the government.

“Whether you like it or not, Bolsonaro left behind a better economy and Lula is only reaping the fruits of that,” said Santos, who blames the economic difficulties during the previous presidency on the COVID-19 pandemic and health restrictions. “Lula is an ex-convict, sentenced for corruption. He had his time in the position; we needed to move the country in another direction. “I don’t see this year going to be brilliant.”

Lula was jailed for alleged corruption in 2018, when he was leading polls to return to the presidency. He was released after the following year the Supreme Court ruled that prison sentences could only be implemented once all appeals had been exhausted, something that did not happen with Lula. The same court later ruled that the judge in the case of Lula, now a pro-Bolsonaro senator, was biased against him.

Lula’s difficulties in the streets were also evident in Congress, which on several occasions voted to override the president’s vetoes, especially on environmental laws. The most recent occurred in December, when lawmakers reinstated laws to undo protections for indigenous peoples’ rights to their lands. The decision set the stage for a new battle between lawmakers and the country’s highest court over the issue.

Brazil’s Congress also decided to override Lula’s veto of a multibillion-dollar bill that exempts various sectors of the economy from having to pay some taxes. That bill was introduced in 2011 and would lose validity at the end of 2023. It will remain in force until 2027, a year after Lula’s term ends.

Other measures took money out of the budget from the federal treasury by allowing legislators to approve resources allocated to other items for themselves, without interference from the executive branch.

Lula’s allies have blamed some of his defeats on Arthur Lira, the president of the lower house, who used to be a strong supporter of Bolsonaro and who has now operated with greater discretion. Lira, who will remain in office for another year, cannot run for re-election under current congressional rules.

The president’s supporters are also upset with his decision not to nominate another woman to replace Rosa María Weber, president of the Supreme Federal Court. They also complain about the leftist ruler’s slow approach to providing more resources for social welfare and inclusion programs.

That is the case of Daniela Fernandes, 34 years old, who works in a government agency in Sao Paulo.

“I believe we can improve our economy, but I also hope that the revenue is spent on the poor, not on making the rich richer with high interest rates and construction work that only suits some legislators,” he said. “I am here because I want our president to control the military who sided with Bolsonaro all these years, to also challenge the far right in the streets.”

Traumann, the political consultant, said Lula’s future will depend on how he moves between antagonistic groups within Brazilian society.

“Dealing with this divided country is certainly the biggest challenge for Lula’s government next year (2024),” he said.