The new president of Brazil will arrive with high unemployment figures and stable rates

Tomorrow, Brazilians will go to the polls again to vote in the second presidential round that is being disputed by Luis Ignacio Lula da Silva and Jair Bolsonaro, current president of that country. In the first round, Silva obtained 48.4% of the votes with 57.2 million units; while, Bolsonaro c.He got 43.2% with 51 million votes.

Whoever arrives will receive an economy that begins to stabilize and present relief in the main macroeconomic data such as employment and consumer prices. The unemployment rate will end for the seventh consecutive month at the lowest level since 2015, indicating that the labor market continued to improve before the second round.

According to official data, this indicator fell to 8.7% in the three months to September, matching the median estimate of economists surveyed by Bloomberg. The number of unemployed reached 9.5 million, the lowest since December 2015, reported to the national statistics agency.

To this is added that the central bank of that nation kept its interest rate unchanged for the second consecutive meeting, warning that inflation remains high and that the world outlook remains volatile. The entity kept the Selic rate unchanged at 13.75%.

Board members are keeping their guard up, even after three straight months of deflation fueled by gas tax cuts and lower oil costs.

Recently, consumer prices rose above the median of analyst estimates in early October, as the impact of the tax cuts begins to fade. Investors still expect the cost of living to rise above target through 2024.

In fact, the bank’s board raised its inflation forecast for 2023 to 4.8%, from 4.6%, while improving its outlook for 2024 to 2.9%, from 2.8%. He reiterated that they will focus on the outlook for the next six quarters. For now, the authorities point to inflation of 3.25% next year and 3% the following year.

To this is added that the International Monetary Fund (IMF) forecasts regional growth of 3.5% this year, which will slow down to 1.7% in 2023. The participation of Latin America in world GDP will fall to 7.3% this year, from 8.5% a decade ago, and is likely to decline further, according to fund estimates.
Mexico and Brazil are exceptions. Neither country handled the pandemic well. The former almost ignored it, while the president of Brazil promoted unproven cures but increased social spending so much that poverty actually fell in 2020, according to the Economic Commission for Latin America and the Caribbean (ECLAC).

Polls suggest that former President Lula da Silva remains the favorite to win the second round of Brazil’s elections. Assets would likely react favorably to a victory by his rival, incumbent President Jair Bolsonaro, although ESG investors might find Brazil more favorable under a Lula government.

The new president of Brazil will arrive with high unemployment figures and stable rates