Data & Intelligence

Navigating Brazil’s 2018 Election: What Investors Can Expect

Right-wing candidate Jair Bolsonaro from the Social Liberal Party (PSL) and Fernando Haddad of the leftist Worker’s Party (PT) are now set to face each other in the runoff election on 28 October. Bolsonaro led a crowded field of 13 presidential contenders with 46% of the total vote, falling just short of the 50% needed for an outright victory. He was followed by Haddad – from the opposite end of the political spectrum – with 29%.

Regardless of who wins the runoff on 28 October, the president-elect will face the formidable task of building an alliance cohesive enough to advance his agenda. The newly elected Congress has shifted slightly further to the right. Bolsonaro’s PSL went from just 8 seats in Brazil’s lower house to becoming the second largest party with 52 of the 513 total seats. Despite this outcome, Brazil’s legislative branch is largely expected to adhere to its traditional makeup: highly fragmented with a centrist leaning majority.

Anger abounds in Brazil these days due to high unemployment, sluggish economic growth, and widespread corruption scandals. This frustration, in turn, has fueled anti-establishment sentiment, putting seasoned politicians and market favorites at a disadvantage. Moreover, the results portend little hope of unity, but rather an elevation of political risks that could spell trouble for investors in the near term.

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