January 10, 2024
- President Lula da Silva concluded his first year successfully delivering on economic and social policies, and with good economic growth and job creation results.
- In contrast, he achieved mixed results in foreign policy and made little progress in his goal to curb what he perceives as threats to Brazilian democracy by the far right.
- The large, pro-business conservative majority in Congress continued to deliver both so-called “structural reforms” and new or improved sector-specific legal frameworks.
- 2024 will be an electoral year, but President Lula and Congress have a busy policy agenda.
- Companies doing business in Brazil should pay attention to the implementation of the 2023 tax reform, which will be crucial to deliver on the reform’s promises to simplify the tax system and reduce compliance costs for companies. They should also pay attention to further tax-related proposals to reform income and payroll taxes and potential legal frameworks on AI, cybersecurity, space activities, bioinputs, carbon market, offshore wind power, and green hydrogen, among others.
President Luiz Inácio Lula da Silva’s main goal of 2023 was to reignite economic growth and job creation with a particular focus on promoting gender equality, social inclusion, and environmental sustainability (details here).
Growth and Job Creation
Market players begun 2023 expecting Brazil to grow 0.78% and improved their expectation up to 2.92% by December. While the official GDP growth rate will only be published later in 2024, the improved expectation points to a reasonably stable economic policy and a successful year for the administration.
In January 2023, players also expected annual inflation to reach 5.36%, but reduced it to 4.46% by December, a signal that monetary policy conducted by an independent Central Bank has yielded a positive result. The benchmark interest rate (SELIC), set at 13.75% since August 2022, was steadily reduced to 11.75%.Continue Reading Brazil Under Lula: The First Year