Brazil’s economy has shown signs of dynamism, with the labor market performing better than expected, even after the central bank increased its key interest rates by 11.75 percentage points since March 2021, to 13.75%. Recently-implemented measures to ease the pain of inflation are expected to further support domestic demand.
Ahead of October’s presidential election, President Jair Bolsonaro got the green light for a multibillion social program that raised monthly cash handouts to the poor by 200 reais until the end of the year. He has promised to maintain that extra payment if re-elected, and so has his main challenger, former President Luiz Inacio Lula da Silva.
Central bank chief Roberto Campos Neto expressed concern about the possible extension of emergency social measures for an indefinite amount of time.
“There’s a well-known saying: nothing is more permanent than a temporary government program,” he said at an event organized by Millennium Institute, a local think tank, after the data was released. “That certainly worries us.”
Bolsonaro is behind in the polls and Lula is promising a raft of goodies if he is re-elected. That’s a recipe for an attempt by Bolsonaro to “buy” the election and improving economic activity will certainly aid his aspirations.Click HERE to subscribe to Fuller Treacy Money Back to top