Brazil has made global headlines over the protests over Luiz Inácio Lula da Silva (called ‘Lula’) winning the Brazilian Presidency.
Its democracy took a blow as supporters of former president, Jair Bolsonaro stormed Brazil’s Capitol Building, Supreme Court, and presidential offices on Jan 8, 2023.
The protest from the right-wing Bolsonaro supporters has disrupted law & order in Brasília, the capital of Brazil. But, this isn’t the only concern for president-elect Lula as Brazil faces steep economic challenges.
Bolsonaro government implemented a fuel subsidy programme including direct cash transfers to lorry drivers. The former president’s government “gutted” Lula-era Bolsa Familia conditional cash transfers and made them direct cash transfers. These measures have provided short-term relief and inflation will bounce back once the subsidies are lifted as reported by Economic Observatory.
The country had the lowest GDP growth of 4.6% amongst BRICS nations compared to 8.9% of India and 8.1% of China as reported by the World Bank.
The Organization for Economic Cooperation and Development (OECD) has forecasted Brazil’s economic growth to be 2.8% in 2022 and 1.2% in 2023. The GDP is projected to grow at 1.4% as on Jan 22.
The Consumer Price Index has seen improvement as the prices have fallen from 8.9% in 2022 to 4.2% (OECD) in 2023.
Another problem faced by Brazil is the dent in International relations under the Bolsonaro Government. Brazil had refused to act in the interest of the climate change policies agreed upon by the dominant nations of the world, souring its ties with the countries. Deforestation in the Amazon forest is at a 15-year high as reported by Imazon, a Brazilian non-profit organization.
The new president will have to rebuild international relations and ensure vital issues such as deforestation in the Amazon forest are kept at bay if it requires economic help from foreign countries.
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