Brazil’s economy stagnated in Q4 2023, ending a promising yet less favorable year, posing challenges for President Lula.
Official figures released on Friday indicated that Brazil’s GDP showed no growth in the October–December period, contrary to the slight growth anticipated by analysts.
Over the entire year, the nation achieved a GDP growth rate of 2.9%.
The notable growth earlier in 2023 was driven by an exceptional agricultural yield, with record-breaking corn and soybean harvests providing a significant boost.
High borrowing costs, coupled with a tight labor market and increased public aid under Lula’s presidency, spurred consumer spending.
These factors combined to deliver economic results that surpassed initial forecasts, improving Lula’s standing politically.
At 78, Lula focused his presidency on supporting the impoverished and raising living standards, confronting a potential economic slowdown.
El Niño’s adverse weather conditions are already negatively affecting Brazil’s agricultural output.
Concurrently, the Central Bank is on a path to gradually reduce the official interest rate, which stands at 11.25%, in response to ongoing inflationary pressures.
Financial experts increasingly worry that Lula may boost public spending to counteract growth deceleration, despite budgetary constraints.
It emphasizes the delicate balance between fostering growth and managing fiscal responsibilities, posing challenges for Lula’s administration amidst economic uncertainties.