THE NUMBERS DON’T LIE LULA’S INCOMPETENCE
By Hotspotnews
Brazil’s plunge from fifth to 32nd in a quarterly global growth ranking is the visible result of a government that expands spending and transfers while private investment absorbs the cost of higher rates. Quarter-on-quarter expansion slowed to 0.4 percent with the Selic at 15 percent, confirming that loose fiscal policy forces the Central Bank to keep credit expensive and activity fragile. Growth that relies on prior momentum or one-off sector strength does not hold when financing costs stay elevated.
Responsibility rests mainly with the federal executive. The Central Bank reacts to inflation and expectations, yet those expectations are shaped by the government’s preference for larger budgets, temporary revenue fixes, and resistance to binding expenditure limits. Persistent deficits raise the debt trajectory and compel higher rates for longer. Firms delay projects, households face costlier loans, and productive sectors yield ground to public claims on resources. The ranking shift from a relatively stronger first quarter to a weak second simply records that trade-off.
Under the Jair Bolsonaro administration the same ranking series showed more variation and occasional higher placements. Brazil ranked ninth among 32 countries in the first quarter of 2022 with 1.0 percent quarterly growth, and finished 28th among 47 countries for the full year of 2022 with 2.9 percent annual expansion. The four-year average real growth of roughly 1.4–1.5 percent was pulled down by the 2020 pandemic contraction of 3.3 percent, followed by a 4.8 percent rebound in 2021 and about 3 percent in 2022. Recovery quarters produced mid-to-upper rankings in smaller samples; the overall period remained marked by an external shock rather than a sustained high-rate slowdown in normal conditions.
The contrast is one of context and policy response. The earlier term included a sharp external collapse and rebound; the current ranking drop occurs without that global emergency and coincides with rates held high by ongoing fiscal expansion. Average annual growth under the prior government was modest once the pandemic is included, yet the recent deceleration to 0.4 percent quarterly growth and a drop to 32nd place reflects the direct pressure of elevated interest costs on private activity. High real rates crowd out investment that raises productivity and formal employment. Capital services public debt instead of building capacity, potential growth weakens, and future tax burdens rise to stabilize finances. Households feel it through scarcer credit and slower wage gains in competitive sectors.
Countries that keep primary expenditure in check tend to see lower risk premia and more stable private expansion. Brazil’s pattern of fiscal looseness followed by monetary tightening produces the reverse. Binding rules that limit primary spending growth, a clearer separation between the budget and the inflation mandate, and measures that raise returns on private capital would reduce the need for prolonged high rates. Without those changes, quarterly rankings will continue to swing with the intensity of public spending and the resulting interest-rate response. The drop from fifth to 32nd is the latest measurement of that cycle, distinct from the pandemic-driven volatility of the previous term.
The quarterly growth rankings cited (5th place in Q1 2025 at 1.4% and 32nd place in Q2 2025 at 0.4%) come from Austin Rating compilations of countries that had released data, as reported in Brazilian economic coverage of the period. Comparable Austin Rating figures under Bolsonaro include 9th place among 32 countries in Q1 2022 (1.0% quarter-on-quarter) and 28th place among 47 countries for full-year 2022 (2.9% annual growth).
Annual real GDP growth rates for 2019–2022 (roughly 1.2%, –3.3%, 5.0%, and 2.9%, averaging near 1.5%) are from IBGE data and standard official series, cross-checked against IMF and media summaries of the Bolsonaro term. The 15% Selic level reflects the elevated policy rate environment driven by fiscal concerns in the later period.
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