Local markets more upbeat about Brazil’s economy under Lula, poll shows

9:12 am Wednesday, July 12th, 2023

SAO PAULO (Reuters) – Financial market participants in Brazil are increasingly optimistic about the country’s economic prospects under leftist President Luiz Inacio Lula da Silva, a poll showed on Wednesday, with the approval rating of his finance minister spiking.

The survey by Genial/Quaest showed that 53% of market players now think Brazil’s economy will improve in the next 12 months, up from just 13% in a May poll, while those who believe conditions will get worse plunged to 21% from 61%.

The shift in opinion among a group that has typically been wary of the leftist president comes as the Lula administration secured support in Congress for bills seen as key to its plans to boost growth.

Those include proposed tax reform, changes to tax trial rules and a new fiscal framework aimed at controlling explosive public debt growth.

“This improvement has been driven by the work of Finance Minister Fernando Haddad,” Quaest director Felipe Nunes said. “Haddad’s performance has managed to convince markets the country’s economic policy is heading in the right direction.”

While Lula’s own approval ratings continue to stutter, Haddad’s approval among market players jumped to 65% from 26%, with those who consider his work to be negative dropping to 11% from 37%.

Markets were happy with the government’s decision to keep its 2026 inflation target at 3% while tweaking the time frame to assess its fulfillment, the poll showed. They also approve of central bank Governor Roberto Campos Neto’s performance.

The growing optimism about Lula’s economic management is bad news for former President Jair Bolsonaro, who enjoyed support among some of Brazil’s finiancial elite.

Bolsonaro is now barred from running for public office until 2030, leaving his former right-wing coalition scrambling for a new political vision.

Quaest polled 94 fund managers, economists and analysts working for 67 different firms in Sao Paulo and Rio de Janeiro between July 6 and 10.

(Reporting by Patricia Vilas Boas; Writing by Gabriel Araujo and Mark Porter)