Synthesis of the Brazilian Economy

BRAZIL ECONOMICS - Report 30 Jun 2025 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

OVERVIEW

IN SEARCH OF POLARIZATION 

With his popularity in steady decline, loss of support in Congress, and Bolsonaro’s candidacy, the so-called "evil“, increasingly unlikely, Lula has decided to dust off the old rhetoric of the struggle between the rich and the poor, or the “upper floor” and “lower floor,” as his economy minister prefers, to revive the waning polarization. The “right vs. left” dichotomy gives way to “rich vs. poor.” The belief that this will be his lifeline rests on fragile assumptions about the world around us and brings harmful side effects to the country.

DECLINING POPULARITY – Polls conducted throughout June show a continued deterioration in Lula’s approval ratings, still affected by the fraud scandal involving INSS retirement deductions, but also driven by deeper causes that are unlikely to be neutralized solely through increased government handouts. Mid-month, a Datafolha survey showed the government’s approval rating at 28%, with disapproval rising to 40%, a 1 percentage point drop in approval and a 2-point increase in disapproval compared to the previous survey. According to Ipsos/Ipec, over a three- month span, the percentage rating the government as “bad” or “terrible” rose from 41% to 43%, while those rating it as “good” or “great” fell from 27% to 25%. In the same survey, trust among city outskirts residents dropped 7 points, from 38% in March to 31%. Living off informal “gigs” while facing rising debt is exacerbating public dissatisfaction and insecurity. The most vulnerable expect quality jobs, safety, and future prospects, issues far removed from the PT’s welfare-focused agenda.

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