Brazil’s Economy Stalls at End of 2023 in Worrying Sign for Lula
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Brazil’s economy stagnated in the fourth quarter of 2023, ending a year of robust growth with a fizzle and foreshadowing the challenges ahead for President Luiz Inacio Lula da Silva. Official data released Friday showed gross domestic product was flat in the October-December period compared to the prior quarter, below the 0.1% median estimate from analysts surveyed by Bloomberg. Brazil’s GDP expanded 2.9% for the full-year 2023. The 2023 expansion was due in large part to a so-called super harvest — record-setting crops of corn and soy beans — that propelled growth in this resource-rich nation despite high borrowing costs. A tight labor market and government aid, which expanded since Lula returned to office last January, also boosted consumption. The combined effect resulted in a far better performance than economists had predicted the start of the year, and improved the president’s political fortunes along with it. The 78-year-old leftist staked his term on helping the poor and improving living conditions. That agenda becomes all the more challenging now that a slowdown seems eminent in Latin America’s largest economy. Unfavorable weather conditions caused by El Nino are already buffeting Brazil’s agriculture sector. And the central bank has committed to only gradually lowering the key interest rate, now at 11.25%, amid lingering price pressures. Concern is mounting within financial circles that Lula may try to offset the drop off in growth through greater state spending despite limited budget space for maneuver.

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https://www.bloomberg.com/news/articles/2024-03-01/brazil-s-economy-stalls-at-end-of-2023-in-worrying-sign-for-lula