Luis Inácio Lula da Silva won Brazil’s fall election with thunderous promises, but faces increasingly bleak economic prospects now that he will take over the presidency in a few days, writes financial times.
Brazil’s GDP growth forecast for 2023 is a raise interest ratesDue to financial uncertainty and the global economic slowdown, it has been revised downwards.
If we compare external and domestic factors, we see that a strong economic slowdown is expected in Brazil next year
said Alessandra Ribeiro, economist at consulting firm Tendências.
Lula, who will officially become Brazil’s president on January 1, said during the election campaign that he would amend laws that limit public spending and reform the tax system so that the rich pay more and the poor pay less. In addition to all this, he formulated the goal of making Brazil self-sufficient oil Point of view. The question is what can be learned from all this in the end.
The labor politician was the head of state of Latin America between 2003 and 2010, during which time the economy expanded at a strong pace, wages rose, the middle class expanded, and millions of Brazilians managed to get out of poverty.
But this time, Lola found himself in completely different economic conditions. The agricultural sector remains strong, and the unemployment rate reached 9 percent, its lowest level in seven years, but higher interest rates due to inflation are negatively affecting the economy. In addition to terribly high interest rates, consumption is likely to fall rapidly, said Marcelo Fonseca, chief economist at asset management firm Opportunity.
Last month, the government lowered the growth rate for 2023 to 2.1%. speculation From the previous 2.5 percent. Independent economists are much more pessimistic: they calculate an expansion of 0.8 per cent.
Worrying signs before you start
Last week, Brazil’s Congress adopted a constitutional amendment, paving the way for soon-to-be-elected Lula to distribute 600 reais (43,000 HUF) per month to those in need as part of the Bolsa Família cash distribution programme. For this, the Brazilian spending ceiling had to be raised to 145 billion reais for one year.
After the announcement, many economists expressed concern, pointing out that this is not the ideal period for big spending. Fonseca said the prospects for next year are not very encouraging, and with a loose fiscal policy, we are unlikely to expect a further consolidation in the coming years.
