Lula’s Approval Dips as Economic Frustration Grows in Brazil

Brazilian President Luiz Inacio Lula da Silva is facing mounting challenges as his disapproval rating reached its highest point since taking office, fueled by growing public frustration over his economic stewardship, Bloomberg reports.

According to a recent LatAm Pulse survey conducted by AtlasIntel for Bloomberg News, nearly half of respondents (49.8%) disapprove of President Lula, an increase from 47.3% the previous month. While his approval rating remained relatively stable at almost 48%, this data marks a significant shift as his job rating has now slipped “underwater” for the first time since he returned to office in 2023.

The survey points to a growing pessimism surrounding the Brazilian economy as the main driver of this discontent. Despite two years of robust growth and record-low unemployment figures under Lula’s administration, Brazilians are increasingly feeling the pressure of high borrowing costs and simmering inflation. Simultaneously, investors are divesting from local assets amid concerns over rising public debt and ballooning budget deficits.

The economic unease is reflected in the survey findings, with more than half of respondents describing the country’s economic situation as “bad,” compared to about a third who viewed it as “good.” A further 15% described it as “normal.”

Lula ended 2024 on a difficult note. A cost-cutting plan unveiled in November, intended to address fiscal concerns, was met with skepticism in financial circles. This was compounded by the addition of new income tax exemptions for the poorest workers, intended to mitigate the political fallout from the austerity measures.

This perceived lack of economic direction triggered a selloff, pushing the Brazilian currency to an all-time low against the US dollar and threatening to exacerbate price increases, which have already prompted the central bank to begin hiking interest rates again.

The poll also indicates that Lula’s efforts to address the situation have so far failed to resonate with everyday Brazilians. While there was strong support for tax breaks for the lowest earners, some 58% of respondents said the measure did not change their opinion of the government. Furthermore, despite Lula’s increased spending initiatives aimed at stimulating growth, nearly 70% of respondents expressed support for reductions in spending to shore up the country’s finances.

Adding to the challenges, Lula also underwent emergency brain surgery in December. In response to the mounting public criticism and declining approval, Lula’s administration has begun a messaging overhaul. He has replaced his communications minister with a veteran campaign advisor. His economic team has also initiated work on a second package of spending cuts, aimed at easing investor concerns about Brazil’s fiscal health.