Lula’s approval ratings fall despite a stronger economy

Approval of the Luiz Inácio Lula da Silva administration has dropped even as the Brazilian economy performed better than expected.

The government of President Lula was rated as good or excellent by 35% of respondents in a survey of 2,000 people pollster Ipec conducted between September 5 and September 9, down from 37% in Ipec's July survey.

Meanwhile, 34% of respondents rated the administration as bad or very bad, compared to 31% in the previous survey, while 28% gave it an average rating, down from 31%. 

The decline comes after statistics bureau IBGE said the economy expanded faster than expected in the second quarter, giving rise to optimism about the growth figure for the full year.

GDP increased 1.4% compared with the first quarter and was up 3.3% from 2Q23. The market now sees the economy expanding 2.68% this year, compared with 2.22% a month ago, according to the average responses in a weekly central bank survey with 100 economists.

"There is a perception among Brazilian businesspeople that the economic and fiscal environment is still very volatile. It's not really clear whether the policy adopted by the government guarantees predictability for businesses in a cycle over the next two years, five years," Ricardo Carvalho, managing director of Fitch Ratings' Brazil corporate finance group, told BNamericas. 

"Given this uncertain scenario, we can see that many investment decisions end up being postponed, even with a very good economic performance not only this year but also in recent years, which has always surprised on the upside," said Carvalho. 

Volatility in the government's approval ratings has been a constant since Lula took office in January 2023, after a bitter and very tight 2022 election battle with former president Jair Bolsonaro. 

According to political analysts, the country's strong left-right polarization explains the volatility, while analysts focused on the economic front are concerned over the current fiscal deterioration, with higher public spending and debt levels.

"In internal surveys that we have carried out with businesspeople, we see that there are major doubts about the government's fiscal commitments. Because of this, we will likely soon see the restart of a cycle of interest rate hikes by the central bank, which is bad for economic activity," said Mansueto Almeida, chief economist at local investment bank BTG Pactual, during an event organized by Fitch.