Job creation and poverty reduction, Bolsonaro's endorsements for reelection

The improvement of the Brazilian economy has become Jair Bolsonaro 's main argument to win reelection in the presidential elections on Sunday, October 30. After the severe crisis caused by the pandemic, the country has returned to growth (+1.7% in the second quarter) and measures to reduce inflation are bearing fruit. In addition, the president has launched several measures to support the most disadvantaged, his main weakness compared to Lula da Silva.

The economy was one of the reasonsfor theright's historic rise to power in Brazil, and now it may be their lifeline to stay in power. In 2013, Brazil's economic boom - which saw its GDP grow by 40% in just 13 years - was shattered, and the country entered a harsh recession. Exorbitant, uncontrolled expenditures, many of them for the construction of stadiums for the 2014 World Cup and, above all, a brutal corruption, which came to light at that time and would end with Lula himself in prison.

Since 2014, the deficit and unemployment skyrocketed. Unemployment reached its highest historical level in March 2017 (13.9%), while GDP suffered several years of recession during Dilma Rousseff's term in office.

A mandate marked by the pandemic

After coming to power, Bolsonaro began to implement his program. Thus, he tackled one of the country's main problems, the high cost of pensions (8.2% of GDP in 2016), by approving an ambitious reform. The measures include the imposition of a minimum retirement age(62 for women and 65 for men), provided that a minimum of 15 and 20 years of contributions have been paid, respectively. According to his calculations, the state will save R$870 billion (US$217.5 billion) over the next decade.

Bolsonaro's economic mandate has been heavily conditioned by the 2020 pandemic. The Brazilian president, seeing the economic cost involved, was one of the world's main detractors of the isolation measures. His position has earned him numerous criticisms, and the more than 674,000 deaths caused by Covid are one of the main arguments of Lula's team. On the economic front, however, it managed to limit the deficit to 3.9% year-on-year (the largest drop in 25 years) compared to the 5.3% predicted by the IMF. Unemployment also rose sharply, reaching 13.8%.

Measures to revive the economy

In 2021, seeing that the situation was not improving, Bolsonaro decided to break the fiscal pact to guarantee the austerity of the public accounts. The stock market fell and inflation reached 8.3%, but Brazil closed the year with a 4.1% increase in GDP and unemployment fell to 13.2%. In addition, he continued with his policy of lowering taxes.

2022, the year of economic take-off

Throughout 2022, the Brazilian economy has continued on an upward path. GDP rose 1.7% in the second quarter, beating experts' expectations. The IMF has upgraded the country's growth forecast for the year as a whole to 2.8%. 1.1% more than the 1.7% announced by the international organization.

Historic reduction in unemployment

Moreover, Bolsonaro is boasting that the labor market has surpassed 100 million workers. As a percentage, Bolsonaro has managed to reduce the unemployment rate from 12.6% in 2021 to 8.9% today.

Inflation reduction

Undoubtedly, another of the triumphs of the economic team is the fight against inflation. After the strong increase produced by the measures to reactivate the economy, the increase in prices stands at a year-on-year rate of 7.2%, lower than that of much more developed countries such as the United States (8.2%) or Germany (10%). In addition, prices have declined for three months in a row (-0.6 in July, -0.3 in August and -0.3 in September).

Poverty falls, food insecurity increases

However, the improvements were not perceived by the population on the ground, so Bolsonaro managed to get Congress to approve US$7.5 billion in aid. With this money, the "Brazil subsidy", a monthly payment to the poor, was increased by 50% in August. In addition, cab and truck drivers, hit by rising fuel prices and inflation, will benefit from support measures.

Bolsonaro also highlights among his achievements the dynamization of business creation and reduction of bureaucracy achieved by his government.

The most relevant aspect of Bolsonaro's economic performance is precisely the reduction of poverty in the country. The data are known with a significant delay, so we can only know the situation in 2020. But the trend is very clear: the poverty rate fell in 2020.

According to data collated by the World Bank, the rate of people with an income below $2.15 per day (in 2017 dollar purchasing power parity), has been falling from 16% in 1997 to 3.3% in 2014. Then, under Dilma Rousseff's presidency, poverty began to rise to 5.4% of the population in 2019. In 2020, the results of Jair Bolsonaro's policies begin to be seen: poverty falls dramatically, to 1.95% of the population. Between 2019 and 2020, 7.23 million people were lifted out of poverty to 4.14 million.

The same is true for inequality. According to World Bank data, both the Gini index and the Theil index are at historic lows, as is poverty.

This good news contrasts with another aspect of poverty: the lack of food security. Rede Brasileira de Pesquisa estimates that from the end of 2020 to the beginning of this year, the number of Brazilians going hungry increased from 19.1 million to 33.1 million. Food insecurity is not the old concept of hunger, but of finding it difficult to maintain an adequate, or constant, diet.

Food insecurity is most severe in the north and northeast, where Lula da Silva's supporters are strongest. In fact, the leftist candidate has based his campaign on food insecurity.