Lula’s Third Year in Office Marks Economic Gains but Legislative Hurdles Persist
Lula’s government celebrates economic progress after three years amid ongoing struggles to pass legislation in a divided Congress and calls for greater infrastructure investment.
- • Unemployment falls to 5.4%, the lowest since 2012, while inflation is forecasted at 4.4% in 2025.
- • Government tax revenue hits record levels, supporting economic growth.
- • Administration faces difficulty passing key legislation due to minority status in Congress.
- • Experts highlight Brazil’s insufficient infrastructure investment at 2% of GDP, advocating for 4-5% for sustained growth.
Key details
After three years in office, President Lula’s administration has achieved significant economic improvements but continues to grapple with a challenging minority position in Congress that hampers legislative progress. According to a recent report, Brazil’s unemployment rate dropped to 5.4%, its lowest since 2012, while inflation is expected to end the year at 4.4%. Social inequality and hunger have also decreased, reflecting progress in social indicators.
The Brazilian government’s tax revenue has seen a historic increase, with October collections hitting a record R$ 247.9 billion, bolstering the country’s economic standing. However, despite these gains, Lula’s administration faces persistent obstacles in passing key legislation. Holding a minority in Congress, the government has struggled to secure approval for important projects, such as tax exemptions, often engaging in contentious and unpredictable votes.
Academics and experts highlight that while economic indicators improve, Brazil's investment in infrastructure remains inadequate, standing at about 2% of GDP. Wilson Levy, director of the Smart and Sustainable Cities postgraduate program, argues that sustained investment between 4% to 5% of GDP is necessary to overcome long-standing bottlenecks in transport, energy, and sanitation. Public investment from 2021 to 2024 remained below 1% of GDP, demonstrating chronic underfunding, which hampers competitiveness and raises production costs.
Levy stresses that a mix of public and private investments, underpinned by clear legal frameworks, is crucial for Brazil’s economic sustainability. While new bidding laws and innovation actions mark progress, excess judicialization and regulatory complexity threaten project implementation, underscoring the need for legal predictability.
Lula’s administration plans to leverage its economic achievements as a key feature of its upcoming 2026 re-election campaign while navigating the persistent difficulties with Congress. The government aims to address these challenges directly to consolidate its gains and advance legislative priorities.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.
