Synthesis of the Brazilian Economy
THE BET ON POLARIZATION
Lula has entered 2024 facing a challenging political scenario, to say the least. Despite decent economic growth and lower inflation in 2023, his approval ratings are not comfortable, and the economic outlook for this year is more modest. Besides public money to boost demand, and saliva to keep militancy awake, Lula’s plans include assuring the good will of the Supreme Court to face Congress, which is strong and generally hostile, with independence that comes from controlling growing slices of the budget through pork barrel amendments (R$ 47.4 billion approved for 2024, up from R$12 billion allotted and R$ 5.5 paid in 2018), and the Electoral Fund (R$ 4.9 billion, up from R$ 1.8 billion in 2018).
As part of this effort, he appointed his justice minister, Flavio Dino, to the Supreme Court, a move that Lula commemorated by saying he had “realized a longstanding dream to have somebody with a head for politics on the Court”. Politics on the Supreme Court has hardly been advisable in recent times, as demonstrated by the single-judge decisions by Justice José Toffoli (appointed by Lula in 2009) suspending payments to the government at the end of last year despite being clearly specified in the leniency agreement signed with Odebrecht in 2016. Not surprisingly, the J&F Group has been equally benefited, allowing the impunity of corruption to rear its ugly head again. These decisions have certainly been music to Lula’s ears, who is aiming to rewrite Brazil’s recent history. But besides personal vendettas, the shakeup has strengthened Lula’s hand with the rebellious Congress. Limits will be tested, and it will be interesting to see how the plan will function upon the end of the congressional recess in February, especially in a year of municipal elections.
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