First Year of Lula: Overview of the Political Situation in Brazil Ifri Memos, Ifri, January 11, 2024

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