Bombs, increase in the price of oil and gas and an explosive impact on the Brazilian election. The war has arrived in politics once and for all and could be a new unpredictable component in the October dispute.
The first and most obvious concern is the price of fuel. Few things fuel inflation more than expensive gasoline and diesel. For President Lula, who is seeking re-election in an already very tight situation, this could be deadly.
In recent days, the government has taken some emergency measures. He zeroed out federal taxes on diesel and is pressuring governors to lower the ICMS, which is a state tax, on the product.
One alert in particular left the government very wary: the threat of truck driver strikes. Let’s remember that in 2018, another election year, this happened, and it helped create the climate for Jair Bolsonaro’s election.
This is just the beginning. Other measures can be adopted, especially as the war shows no signs of ending anytime soon. The value of a barrel of oil, which was close to 70 dollars before the conflict began, has now surpassed 100. The price of gas, another important input, has also soared.
This Wednesday, the government had other news that was not very encouraging. The Central Bank even reduced the interest rate, but indicated that it will do so at a much slower pace than planned. The reason, of course, is the risk of inflation spiking.
As a result, the economy ends up growing less than expected, with an impact on employment, production and tax collection. This is very negative for a government that already has difficulty meeting its fiscal targets.
For the Lula government, maintaining a good economic situation is fundamental. This is the president’s greatest asset in getting re-elected. Before the war, everything seemed to be going well, with low unemployment, controlled inflation, moderate economic growth and the prospect of falling interest rates.
This has been reversed since Donald Trump decided to attack Iran. The person who can benefit from this economic situation, of course, is Senator Flávio Bolsonaro.
And look how ironic: in the end, the American president could end up helping the opposition much more with the war he provoked in the country than with those sanctions he launched last year to try to protect former president Bolsonaro.
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