It was 19.56pm on October 30, 2022 when Lula was elected president of Brazil for the third time in his long and intense political parable. The former union leader, candidate for the first time in 1989 and former president from 2003 to 2011, he accomplished this a few days ago one year after the electoral victory, although he actually took office on January 1, 2023, as is customary in Brazil. Which is the budget for a president who is still much loved from the less wealthy sections of the population but who some consider a lame duck, partly due to his 78 years, partly due to the over 18 months spent in prison for the Lava Jato scandal, which undermined his health, partly 'because his majority in Parliament is narrow and forces him weekly to compromise, widen the field, Cencelli textbook appointments and hypothetical reshuffles?
The balance sheet of the Lula presidency: more lights than shadows
Despite all this, the balance seems to be objective more lights than shadows. Meanwhile, for now Lula is approved by the voters: indeed, in August he reached the peak of 60% approval of the government's performance, given that it then dropped to 54% but still indicates a majority in public opinion, unlike his predecessor Jair Bolsonaro, whose popularity had already plummeted in the first months of his mandate. Then, there are the economic data and financial: Brazil's gross domestic product will grow this year at around 3%, an estimate revised significantly upwards in recent months thanks to a series of favorable indicators such as inflation contained at 5%, the return of foreign investments and the favorable scenario of the raw materials market, in which Brazil is usually a protagonist especially in the agri-food, energy and mining sectors.
Also the stock market has given positive signals: so far in 2023 it is growing, although it has decidedly slowed down its rally for a couple of months, starting a bearish phase that brought the Bovespa index of Sao Paulo to 112.500 points last October 30, just above the 109.700 points with which had closed the last session of the Bolsonaro presidency, last December 29th.
Lula's stumbles
The slowdown is due to some Lula's stumbles, which substantially convinced the markets and above all repositioned Brazil at the center of the international community, but not always in a convincing way, such as on the environment and the Amazon, or even ambiguous, as on war in Ukraine, for which the Brazilian leader is acting as spokesperson for a difficult peace mission together with other powers such as China and India. And also on the conflict in the Middle East, Lula among the G-20 leaders is definitely among those least willing to support a very harsh response like the one Israel is deploying.
It is probably precisely these positions, which in some ways are anti-Western and which wink at the new world axis represented by former Brics and by their strategic expansion to Arab countries with a view to Iran, Cuba and Venezuela, to have done so undermine financial confidence global impact on a country which is the largest economy in South America, has achieved stability which, according to the IMF, will lead it to become the ninth economy in the world by absolute GDP at the end of the year, ahead of Canada and just behind Italy, but which it still depends on the export of its raw materials and therefore on the international question, not being able to count on the industrial fabric that a country of over 200 million inhabitants should have.
Debt management and investments for growth
Then there is also the debt issue: the Lula government, through the rigorous Minister of Economy Fernando Haddad, had promised a budget law from "zero deficit” in 2024. Recently, however, the president has made it clear that reducing public spending is not the priority, given that poverty under Bolsonaro has returned to alarming levels (according to the UN, at least 70 million people in Brazil do not have guaranteed access to food), the which makes it necessary to invest in healthcare and above all to confirm if not reinforce subsidies. However, the comment from Folha de Sao Paulo was harsh, with the headline on the deficit: “Lula is sabotaging the country.”
On the other hand, Lula launched a maxi investment plan for growth to 2027, whose priorities are education, health and energy transition. Precisely on the latter, however, the socialist president's recipe is not entirely convincing, given that it does not provide a specific commitment for the safeguarding the Amazon, whose rate of deforestation is only slightly decreasing under his presidency (although increasing in other forest areas of the country), and which also on biofuels provides for an increase in the percentage of mandatory vegetable oils in the mixture, but these are largely represented by palm oil, one of the main causes of deforestation. Furthermore, Lula has given for now the green light for Petrobras, the national oil giant, to extract again at the mouth of the Amazon River. So much for the green new deal which he promotes in international forums.
