The Right Wins Big in Brazil – And Markets Rally in Response
The Right Wins Big in Brazil – And Markets Rally in Response
The briefing analyzes how Brazil’s election is reshaping the country’s political and economic outlook, and what the potential shift towards Washington – alongside Brazil’s continued economic dependence on China – could mean for international business and investors.
Executive Summary
The Partido Liberal (PL) came out strongest in the Congress; its leader, Senator Flávio Bolsonaro, is the favorite to beat President Lula’s in the October 25 runoff.
A Bolsonaro government would align Brazil politically with Washington, but agri-business, central to his coalition, would block attempts to move away from China.
Markets rallied on the result, yet whoever wins inherits a nominal deficit close to 10% of GDP and little room for tax cuts or public investment.