BRAZIL ELECTION ANALYSIS: Neither Lula or Bolsonaro secure 50% of votes for outright victory, sending the election to a run-off
Analysis details (14:21)
- The first round of elections saw Lula lead but Bolsonaro performed better than polls expected, leaving both candidates short of the 50% of votes needed to win the election outright, sending the election for a run-off vote with the second round on October 30th.
- Lula secured 48.4% of votes (or 57.3mln), while Bolsonaro secured 43.2% of votes (or 51.1mln). Meanwhile, the other key candidates, Simone Tebet (centrist), secured 4.2% of votes and Ciro Gomes (leftist) secured 3% of votes, so attention turns to who they voice support for.
- Bolsonaro has previously questioned the voting system and there are worries that in the event of a Bolsonaro loss, he may dispute the result and blame election fraud. However, the BBC reported international election observers have said the vote was fair and transparent.
- Nonetheless, with voting heading to a second round it is a close call but analysts at Pantheon Macroeconomics note the most likely scenario is a Lula victory. Argus highlight a Lula victory would mean Petrobras will continue to be state controlled, and Lula wants to focus on investment in renewable energy while also expanding the domestic refining capacity.
- The Real strengthened heavily on Monday after the results, which saw USD/BRL hitting a low of 5.2339, back to levels from 23rd September. The stock market is up c. 3% while interest rate future contracts are down sharply.
- Pantheon Macroeconomics highlights that despite the upcoming election, Brazilian markets have performed relatively well in recent months, suggesting both candidates are considered business and market friendly.
- Note, the latest weekly poll of economists this morning via BC saw institutions slightly lower their IPCA inflation forecasts for 2022, while 2023 was unchanged. Meanwhile growth forecasts saw a marginal revision higher for both 2022 and 2023 but forecasts of the Selic rate and USD/BRL were maintained.
03 Oct 2022 - 14:20- Research Sheet- Source: Newsquawk
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