Brazil’s economic performance has been decent in 2023. Despite the International Monetary Fund’s (IMF) conservative growth forecast of 1% in October 2022, the actual growth now exceeds 3%. However, the outlook for 2024 is uncertain. With November’s inflation drop to 4.7% compared to the same period in 2022, interest rates are decreasing, yet the Selic key rate1 remains high at 11.75%. External accounts are robust, with a current account deficit below 2% of gross domestic product (GDP) easily financed by foreign direct investment (FDI), maintaining foreign currency reserves at USD 340 billion. However, a concern arises from the public finance deficit, as the government initially projected a 1.3% GDP primary deficit for 2023 and recently revised it to approximately 1.7%, leading to an overall deficit exceeding 7%, posing sustainability challenges.

• Brazil’s economic performance was satisfactory in 2023, while Lula faces a much less favorable international context than in his first two terms and a right-wing Brazilian parliament.
• His social priority, just as in 2003, is to lift some of the seventy-one million Brazilians out of poverty. Social transfers, ultimately inexpensive, will contribute to this aim. Brazil also needs more sustained growth.
• December’s vote on tax reform was an undeniable success for both Lula and his finance minister. It also highlighted the difficulties of negotiating with a parliament dominated by special interests.
• Lula’s time in office was finally marked by Brazil’s return to the world scene, after four years of eclipse. Maintaining good relations with all parties, with a view to a possible role as mediator in certain conflicts, is, however, difficult in a more polarized world. 

> The French version of this Briefing is also available at this link : First Year of Lula: Les enjeux politiques au Brésil après un an de présidence Lula