ABSTRACT
This chapter sets out the economic context surrounding Lula's return to power in early 2023. It highlights the long-running issues which will need to be addressed if Brazil is to achieve a trajectory of sustainable and inclusive growth. Beginning with a summary of Brazil's economic performance over the long term, this chapter points to the achievements (some of which were realised during Lula's first two terms), the failures, and the emerging challenges. Two critical longstanding themes here concern growth volatility, and a failure to ensure that the fruits of economic progress are adequately shared by all. Next, this chapter focuses on the priority areas which the new administration will have to grapple with if Brazil is to escape from what could be characterised as a middle-income trap. Areas to be discussed include patterns of trade specialisation (especially reversion to dependence on primary products), anaemic productivity growth, low levels of fixed investment, and challenges surrounding training, education, and the environment.
