Synthesis of the Brazilian Economy

BRAZIL ECONOMICS - Report 03 Apr 2023 by Affonso Pastore, Cristina Pinotti, Paula Magalhães and Diego Brandao

Below we examine the political contradictions of the government and some details and implications of the new fiscal framework.

A feeling of perplexity has crystallized about the behavior of President Lula and the paralysis of his government during its first three months, the “honeymoon” period when the political capital obtained from the election should have been used in pursuit of the necessary measures, albeit unpopular, seeking to put the country on track to economic growth and social peace, as promised during the campaign and in his inaugural address. The country’s situation, much more complex and challenging than 20 years ago, allied with the price charged by the passage of the years and the erstwhile errors committed, appears to explain the president’s dangerously bellicose attitude. Instead of the economic pragmatism commanded by then Finance Minister Palocci, what is on display now is an outdated attachment to narrow-minded and populist ideologies, mimicking the oversimplification of the previous government in addressing issues that neither the former nor current president seem to grasp.

Feeling urgency by the widespread public foreboding, Lula has been trying to reconstruct the past, by pushing all the buttons within his reach in an attempt to turbocharge the economy. In a continuous flashback, past programs have reentered the picture, reformed or not: Bolsa Família, Minha Casa Minha Vida, Mais Médicos, PAC, etc. The Economic Council has also been reborn to hear from and please business executives, additionally aggrandized with invitations for international travel, harking back to the cronyism of the past. Protection, privileges, favors and subsidized loans are back on the menu, while economic opening, the search for efficiency, innovation and justice are glaringly absent.

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