Lula's Election 'Completes the 2nd Pink Tide'... Economic Recession Test Different from 12 Years Ago

Late 1990s First Left-Wing Government Period... Latin American Countries Enjoyed Economic Boom
Now Economic Uncertainty Due to Interest Rates and War... Severe Social Division Also a Major Challenge

‘The Godfather of Latin American Left’ Luiz In?cio Lula da Silva, former President of Brazil (77), is seen celebrating with his wife Rosangela Zancan da Silva, raising their thumbs in joy after securing a third term in the Brazilian presidential runoff election on the 30th (local time). S?o Paulo, Brazil = Photo by AP and Yonhap News

[Asia Economy Reporter Park Byung-hee] With Lula securing a historic third term as Brazil's president, all six major economies in South America are now governed by left-wing administrations, leading to assessments that the second "pink tide" has been completed.

The pink tide refers to the political trend from the late 1990s to the early 2000s when moderate socialist-leaning left-wing governments consecutively took power in South American countries. Unlike typical left-wing governments focused on welfare and reducing social inequality, the South American left-wing governments at that time pursued a pragmatic approach, and the media described the political situation as pink rather than the red color symbolizing the left.

Although the pink tide weakened from the mid-2010s due to prolonged economic crises following the 2008 global financial crisis, it has been gaining momentum again since the election of Mexican President Andr?s Manuel L?pez Obrador in 2018. Following Mexico, left-wing governments have taken power in Argentina, Peru, Chile, and in June this year, Gustavo Petro, the presidential candidate of the left-wing coalition "Historic Pact," was elected in Colombia, marking the country's first left-wing administration.

However, analyses suggest that the second pink tide may find it difficult to succeed as it did during its first wave. Unlike the first period when South American countries enjoyed economic prosperity thanks to rising commodity prices, the current global economic uncertainty is heightened due to factors such as the U.S. interest rate hikes, the Ukraine war, and the COVID-19 pandemic.

Lula was a key figure who sparked the first pink tide. Although a left-wing president who was formerly the head of the metalworkers' union, during his first term he embraced centrist economic policies and pursued a pragmatic approach. He actively introduced private enterprises and global capital to promote economic growth. Brazil's economy prospered during Lula's tenure, coinciding with the U.S. interest rate cuts and a commodity boom in the mid-2000s.

According to The Economist, Brazil's average annual economic growth rate exceeded 4% during Lula's first term. In 2011, right after Lula left office, the International Monetary Fund (IMF) ranked Brazil sixth in the world by nominal GDP, following the United States, China, Japan, Germany, and France. Thanks to this, Lula retired at the end of 2010 with an exceptionally high approval rating of 90%, enjoying overwhelming support from the majority of the population.

However, over the past decade, Brazil's average annual economic growth rate has been only 0.3%. The IMF's global GDP ranking also plummeted to 12th place as of last year. Economic inequality in Brazil has worsened, and poverty has surged amid the COVID-19 pandemic. In August, the United Nations released the Hunger Map, reclassifying Brazil as a hunger crisis country for the first time in eight years. The UN includes countries on the hunger map where more than 2.5% of the population faces chronic food shortages. Brazil's chronic hunger rate currently stands at 4.1%.

Before economic recovery, Lula faces the challenge of uniting a divided society. As seen in the narrowest margin of votes since the introduction of direct presidential elections in 1989, Brazil exhibited severe social divisions during this election. These divisions span race, class, religion, and other aspects. The poor, Black people, women, and Catholics supported Lula, while the wealthy, white people, men, and evangelical Christians supported Bolsonaro.

The high likelihood that incumbent President Bolsonaro will reject the election results could be a factor prolonging social unrest in Brazil after the election.

This content was produced with the assistance of AI translation services.