After two straight quarters of economic growth in Brazil, Lula is back to beating expectations
The ambitious president wants to recreate the economic success of his first stint in office
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The Brazilian economy has grown during the first half of 2023, presenting a sharp contrast to neighboring countries at risk of recession.Photo: Ricardo Moreira (Getty Images)
By
Diego Lasarte
Published Yesterday
Last week, Brazil announced that its gross domestic product grew by 0.9% during the second quarter of this year, three times more than market expectations. This gain builds on previous growth for Brazil’s economy, which expanded by 1.9% in the first quarter.
The good news comes amid an economic downturn for South America, with major emerging economies like Chile, Colombia, and Peru shrinking in the first half of the year. In Argentina, one of Brazil’s closest trading partners, the central bank recently took drastic steps to stabilize the peso, including raising interest rates to a benchmark of 118%.
So how has the Brazilian economy managed to defy the odds? Among the contributing factors: Brazil avoided the worst of South America’s high inflation, enjoyed a bumper harvest from its agricultural sector, and saw its international credit rating upgraded.
But mainly, president Luiz Inácio Lula da Silva’s time-tested tax-and-spend strategy—along with a strong campaign for public ownership of utility and energy companies—appears to be stimulating the economy much like it did in the early aughts.
A brief history: The radical economics of Lula’s first presidential stint
Ahead of Lula’s first presidential election win in 2002, the outlook was grim. Economists warned that if he was elected and able to enact his sprawling social welfare reforms, the economy would crash. Brazil’s currency, the real, lost 35% of its value after polls indicated that Lula would be the likely victor. He was even forced to write an open letter to calm the markets, promising he wouldn’t make radical changes too quickly.
More:
https://qz.com/after-two-straight-quarters-of-economic-growth-in-brazi-1850805748