Brazil’s President-Elect Promises Prosperity but Faces Economic Perils

Voters who swept Luiz Inácio Lula da Silva back into the presidency Sunday fondly recall his last heady two terms in office in the 2000s when commodity prices were soaring, poverty was plunging and Brazil was finally seen as the country of the future.

“The people will eat steak and drink beer again…they will be happy again,” Mr. da Silva told supporters in the campaign that ended with Sunday’s victory over President Jair Bolsonaro, who has yet to concede or comment on the results. 

But Brazil’s president-elect will struggle to deliver on those promises in the current economic climate when he takes office Jan. 1, economists said.  Brazilian stocks were down some 2% in early trading in São Paulo on Monday, while the country’s currency, the real, weakened about 0.6% to the dollar. 

Mr. da Silva—who former President Barack Obama once called “the most popular politician on earth”—is now 77 and faces a different world. China, the biggest buyer of its exports, expects its worst slowdown in years, the U.S. is forecast to enter recession in the next 12 months, and countries worldwide, among them Brazil, are struggling to reduce poverty and jump-start moribund economies as they emerge from the Covid-19 pandemic.

When Mr. da Silva first took office in 2003, Brazil’s economy was revving up as a rapidly growing and voracious China consumed everything from Brazilian iron ore to beef, sugar to soybeans.