Brazilian inflation is now around 3.5% a year, and real interest rates have dipped to between 2% and 3%. Credit-default risk is easing, the stock market is climbing, and forecasts for growth are improving—though still well below what Brazil needs to become a developed country.

This brighter outlook, after nearly three years of recession, began during the presidency of Michel Temer, who took over after Workers’ Party President Dilma Rousseff was impeached in 2016. But it has gained momentum since the inauguration of President...