Lula may pursue risky economic measures to halt falling approval

Public approval of Brazil’s President Luiz Inácio Lula da Silva is falling slowly but steadily to levels that could pose problems for this administration and the economy.

While a decline in approval is normal, Lula's has been falling despite improving economic indicators in the first two years of his administration.

According to a survey published by Ipec, 34% of respondents rated the administration good or excellent, down from 38% in December 2023. Meanwhile, 34% rated the administration bad or very bad, up from 30%, as the percentage for an average rating remained flat at 30%.

Datafolha found that 35% rated the administration good or excellent, down from 38%, and 34% said it was bad or very bad, compared to 30% a year ago.

-Quaest polled 8,600 people between December 4 and 9, and found that 33% found the administration good or excellent, down from 36%, and 31% bad or very bad, up from 29%. 

Although approval ratings generally fall as presidential terms progress, Lula’s are falling despite economic expansion.

This year, the government expects 3.5% growth and last year, it registered 3.2%, compared to 2.9% in 2022.

The most recent figures by statistics bureau IBGE, covering August-October, showed that unemployment was at 6.2%, a 10-year low.

Economists agree that economic growth was mainly driven by public spending, but this option becomes increasingly unviable due to fiscal challenges.

"It is very difficult to predict approval ratings for the coming years, due to political polarization in Brazil. However, there are indeed risks of significant deterioration among one-third of the population, who are not strongly connected to either left-wing or right-wing political parties, and who may feel negative effects in the economy if the appreciation of the dollar against the real continues and inflationary pressures persist," Mário Sérgio Lima, an analyst at Medley Global Advisors, told BNamericas.

The real has depreciated sharply against the greenback in recent weeks and interest rates increased due to market concerns about lack of commitment to reduce public spending and debt.

"If the government perceives a significant drop in approval levels, there are risks that it will adopt more interventionist measures in the economy, such as using [development bank] BNDES for some kind of subsidized loan mechanism and controlling fuel prices, especially as we approach the 2026 presidential elections," added Lima.

Despite his advanced age and the political-economic scenario, Lula has signaled that he intends to run for re-election in October 2026.