The Brazilian government had a slightly more difficult month in October with the right-wing opposition adopting a more aggressive stance. After a Supreme Court ruling upholding indigenous land rights, the conservative-dominated Senate has voted for a bill that would erode them, risking a possible clash between the legislature and the judiciary. The right-wing opposition is also stepping up pressure on emotive issues such as crime and security, family values, abortion, and equal marriage. 

President Luiz Inácio Lula da Silva’s approval rating dropped back to 40.6% at the end of September compared to 43.1% in May, according to a CNT/MDA poll. However, compared to his predecessor Jair Bolsonaro, he is continuing to do well. 

The future of the long-negotiated free trade agreement (FTA) between the Mercosur counties — Argentina, Brazil, Paraguay and Uruguay — and the European Union (EU) remains uncertain. It is dependent on the outcome of the second round of voting in the Argentine elections because the far-right populist, Javier Milei, has threatened to withdraw his country from Mercosur. Such an outcome would have a significant impact on Brazil. The position will become clearer by the end of Q1 2024. 

Brazil’s diplomats have used the country’s current membership of the UN Security Council to seek to steer a balanced course on the Israel-Gaza crisis, but the issue remains deeply divisive in domestic politics.

The government has launched a new anti-crime initiative designed to improve information sharing between federal and state-level police, and to strengthen security at ports, airports, and border crossings. Extra resources are promised for crime ‘hot spot’ states including Amazonas, Bahía, and Rio de Janeiro. An opinion poll indicates crime is a prominent issue for 70% of voters. 

A number of institutions — including the Banco Central do Brasil (BCB), the finance ministry, the IMF and World Bank — have all raised their forecasts for GDP growth this year to around 3%, citing: strong agricultural growth; resilient services; and a positive but rather flat performance by industry.

The BCB announced another 50 basis points cut in the benchmark Selic interest rate in September, taking it down to 12.75%. Such cautious 0.5% cuts are expected to continue for the rest of this year, with the bank monitoring September’s increase in inflation rate, along with global risks to food and fuel prices triggered by the Israel-Gaza crisis. 

The Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis, (IBAMA) environmental regulator has authorised state-owned Petrobras to drill exploratory wells in part of the Equatorial Margin that is thought to contain prolific crude oil reserves. 

The October 2023 issue of Brazil Focus also includes the following:

Politics

• The going gets a little tougher for Lula’s Administration
• Back and forth on indigenous land rights
• Implications
• A list of friction points
• Presidential approval ratings drop back

Foreign Relations

• Push for the Mercosur–EU Free Trade Agreement
• Israel crisis is a challenge for Lula’s Administration

Security

• New security plan seeks to win over public opinion
• No fireworks at Congressional enquiry into 8 January riots

Economy & Business

• Pace of growth eases, but is still above expectations
• Worries over El Niño
• Fiscal reckoning on the agenda
• Carrefour attempts to export atacarejo model to France 
• JBS accused of greenwashing

Energy Sector

• IBAMA greenlights exploration work in Equatorial Margin
• Wind energy legislation moving forward