Revista CIDOB d'Afers Internacionals (May 2004)
A Year with Lula: Awaiting Growth
Abstract
This study provides an assessment of the Brazilian economy during the first year of the Lula Government, beginning with the situation that it inherited and the policies that it adopted. In this sense, the article emphasises that the most evident characteristic is the exceptional behaviour that the financial variables have exhibited: the reduction in the differential of the interest rates on Brazil’s debt; the appreciation of the Brazilian real with respect to the dollar; and the profitability of its stock market. However, all of this has been accompanied by a cut in public spending, higher interest rates, higher unemployment rates, and, since the last two quarters of 2003, a recession. For this reason, the author concludes by stating that the country’s economic growth is not enough to reduce inequality and poverty. In order to reach the goals set out in Lula’s social reform programme, it is important to improve the quality of the country’s economic and political institutions.
