Brazil's economy grew under Lula, but high interest rates and debt limited relief

Brazil's economy grew, unemployment fell to historic lows, and average income rose during President Luiz Inácio Lula da Silva's third term, yet high interest rates and household debt limited the financial relief felt by the population. Lula was narrowly re-elected with 51.79% of valid votes against Flávio Bolsonaro's 48.21%. Economists say the positive aggregate indicators mask uneven benefits across sectors and worker groups, with new jobs concentrated in lower-skilled services. Families committed 28.7% of monthly income to debt payments in July 2026, near the record high, while the share of indebted households rose from 78% in January 2023 to 81.7% in September 2026. Government accounts recorded primary deficits every year since 2023, pushing gross public debt to 82.9% of GDP by August 2026. The Selic base rate fluctuated between 10.5% and 15% during the term. Economists credit the consumption tax reform and central bank autonomy as positive measures, but note fiscal policy and industrial policy faced significant challenges.