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Brazil’s economy surpasses expectations in Lula’s first year back

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Picture: Joédson Alves/Agência Brasil – The 2023 economic data are better than forecasts made at the beginning of last year. With a rise in GDP, inflation under control and a falling dollar, economic activities increased more than the forecasts and without rising prices, the writer says.

By Vinicius Konchinski

The Brazilian economy ended 2023 better than forecasts made by economists who have links to the financial market. The first year of the third presidential term of President Luiz Inácio Lula da Silva (Workers’ Party) presented growth above expectations, lower inflation and a positive trade balance higher than expected.

The performance above estimates is seen in economic data released until now and also in forecasts for 2023 released in December and which will still be consolidated. The data contrast with estimates released at the end of 2022.

These estimates – which proved underestimated – were collected by Brazil’s Central Bank (also known as BC, in Portuguese) through Focus Report. To prepare the report, the BC consults bank economists weekly.

Economist Miguel de Oliveira, the director of the National Association of Finance, Administration and Accounting Executives (Anefac, in Portuguese), said that most of his colleagues in the profession had not much trust in Lula’s economic policies. They also opposed the appointment of Fernando Haddad (Workers’ Party) to the Ministry of Economy. This feeling was reflected in the exaggerated pessimism about 2023, which proved baseless. “They had very negative expectations. They were waiting for the worst,” he said.

Mauricio Weiss, an economist and professor at the Federal University of Rio Grande do Sul (UFRGS), recalled that Brazilian agribusiness and Petrobras boosted national economic growth. “One cannot deny the [positive] impact of this primary sector,” he explained.

Sociologist Fausto Augusto Júnior, the technical director of the Inter-Union Department of Statistics and Socio-Economic Studies (Dieese, in Portuguese), added that the real increase in the minimum wage and the consolidation of the Family Grant programme (Bolsa Família, in Portuguese) at BRL 600 (about US$ 122) per month guaranteed a minimum consumption capacity for the population. Therefore, it contributed to economic activity well above that expected by the so-called “market”.


At the end of 2022, bank economists and those at investment brokers estimated that the Brazilian economy would grow 0.8 percent in 2023. It was recorded in the Focus Report released by the Central Bank on December 30, 2022. From January to September 2023, however, the country’s GDP increased by 3.2 percent compared to 2022, according to the Brazilian Institute of Geography and Statistics. The same bank economists expected growth of 2.9 percent.


The Focus Report published on December 30, 2022, informed that bank economists expected inflation to reach 5.31 percent at the end of the year, that is, closing the year above the maximum goal, which is 4.75 percent per year. In the last 12 months ending in November 2023, the Broad Consumer Price Index (IPCA, in Portuguese) accumulated a variation of 4.68 percent, according to IBGE. Now, economists estimate inflation will close 2023 at 4.46 percent – that is, within the goal, something that has not happened since 2020.


Bank economists expected the dollar to close the year at BRL 5.27. The US currency has been worth less than BRL 5 since October. In November, it dropped to BRL 4.84. Currently, the dollar exchange rate is around BRL 4.90.

Trade balance

At the end of 2023, the balance of exports after discounting imports was estimated at US$ 58 billion. By December 25, it had already reached almost US$ 96 billion – 65.5 percent higher than the forecast.

Formal jobs had a low increase

For 2024, bank economists estimate that the national economy will grow 1.5 percent, that is, around half of what happened in 2023. Fausto thinks that the Growth Acceleration Programme (PAC, in Portuguese) and other government initiatives to reactivate public investment can sustain an increase of 3 percent of GDP in 2024.

Pedro Faria, an economist and researcher at the Centre for Development and Regional Planning at the Faculty of Economic Sciences (Cedeplar, in Portuguese) at the Federal University of Minas Gerais (UFMG), highlighted that the debt of families and companies has fallen throughout 2023. The percentage of families indebted fell from 78.9 percent to 76.6 percent, according to a monthly survey by the National Commerce Confederation (CNC).

With less debt, these families – and also companies – will be able to resume consumption and investments in 2024. That tends to contribute to the economy of the year just begun. – Editing: Rebeca Cavalcante; Translation: Ana Paula Rocha

This article was first published on Brasil de Fato