Lula’s new Brazil has what it takes for a bright future. Maybe

I stop for a moment to reflect on the numerous reports I have read in the international press in recent years about Brazil. A real disaster, where the common thread has always been something wrong that was happening in Brazil or that the incumbent government was provoking. All always written by international observers who did not live in the day-by-day in Brazil but had the topic at heart. First consideration of circumstance.

During the same period, I observe the evolution of the Brazilian economy and note some facts that I find interesting. My observatory is less authoritative and I. I live in Sao Paulo for 20 years. Brazil stands out from the rest of Latin America due to its size, not only geographic, but also economic, in fact its GDP is greater than that of all the other countries put together. But the comparison actually needs to be framed more broadly, given that the other world economies are also not doing so well from the pandemic.

The dollar reserves are very large, around 350 billion, and have remained stable during the pandemic. Interest rates dropped a couple of years ago to 2%, to an all-time low, and then rose to the current 13.75% with very quick action implemented by the Brazilian Central Bank engaged in the fight against inflation, which first rose to 12% and has now fallen to 7%. Monetary policy has worked and Brazil is the first country to stop raising interest rates and is now moving in the opposite direction. In a world scenario where inflation is a general headache, it is sobering.

Also by reading the estimates of two investment banks, respectively Jp Morgan and Morgan Stanley, I note that the GDP will grow by 2.8% this year and there is a lot of encouraging information on the Brazilian economy, together with the fact that many companies have recently gone public: just think that in 2021 there was a boom with 46 IPO, therefore a very lively capital market. And in the job market, the unemployment rate has dropped from 13% to 9% in the past 12 months.

I come to a first conclusion: in Brazil the economy improved at night while the Minister of Economy Paulo Guedes slept.

I stop for a moment after the elections that literally left a country last Sunday split in two and I read the international press. I have never read so many positive articles about Brazil in such a short time, so much so that I feel inebriated and happy to live in Brazil. “Without contradiction there is no life,” said Mao Tse-tung.

So in the light of what I have observed, I can only be very optimistic with the new government Lula. He is a highly experienced politician capable of making coalition and wide-ranging agreements. This is necessary because there is a congress that is an expression of the conservative wing and with which he must deal if he wants to govern and see the laws approved. Moreover the senators in Brazil they remain in office for eight years so they go well beyond a presidential term. Lula has already stated that the environmental theme will be one of his priorities and this is a theme very dear to international attention. So to the investors who have flocked to Brazil in recent years, first among the Brics to know how to attract direct investments, as many investors will join who may have wanted to invest before but felt uncomfortable.

I am ready to see Brazil become thegeopolitical alternative, given that Russia and China for different reasons are off the radar of some important negotiations, and I am ready to read in the international press one side, the good and perhaps forgotten side of Brazil. Could we perhaps think of a new, emblematic golden moment, the Lula gold standard? (All rights reserved)

* managing partner Gm Venture, president of the Sao Paulo Chamber of Commerce

Lula’s new Brazil has what it takes for a bright future. Maybe – MilanoFinanza.it