Capitol riots ++

Bolsonaro’s inflammatory rhetoric stokes fears of riots in Brazil if Lula wins.

We were recently asked if a coup d’état could be on the cards after Brazil’s general elections in October. President Jair Bolsonaro, the trailing candidate and a former military man, is closing the gap on Luiz Inácio Lula da Silva (“Lula”) in the polls and had recently staged mass rallies with extremely inflammatory rhetoric. Putting all this together, some market observers are concerned that a narrow Lula victory could lead to a coup d’etat, but how likely is this?

Fortunately, our sources in Brazil see a coup d’etat as an unlikely scenario but protests that make the Capitol riots in Washington look tame are more likely. In preparation, Bolsonaro has already started a narrative that the elections will be rigged. If the result is close, expect fireworks!

Lula, former president of Brazil from 2003 to 2010 is leading the polls ahead of incumbent President Bolsonaro but the gap has been narrowing over the last weeks, especially after Bolsonaro’s administration passed a social welfare package known as Auxílio Brasil. An executive at a leading private bank in São Paulo didn’t think this would be enough, “At the end of the day, Auxílio Brasil is just a reshuffled version of the Bolsa Família, and voters know that, particularly the poorest who he is trying to appeal to, given that they started receiving funds during Lula’s mandate.”

“At the end of the day, Auxílio Brasil is just a reshuffled version of the Bolsa Família, and voters know that, particularly the poorest who he is trying to appeal to.”

Executive, private bank, São Paulo

Unsurprisingly, one of Brazil’s most revered pollsters was still sitting on the fence, “As it stands today, it seems indisputable that Lula will win – he has run a solid campaign, has avoided major gaffes and, his numbers have been consistent for weeks. But it would be foolish to dismiss Bolsonaro, remember he had 27% support in May and is now at 34%. If this goes to a second round run-off, anything could happen.”

A Genial/Quaest poll carried out between 1 and 4 September showed that Lula has a 44% support, with Bolsonaro trailing behind with a 34% vote intention. In the second round, the same poll predicts that Lula would take 51% of the votes, while Bolsonaro would receive 39% of valid votes.

Despite the narrowing gap between both candidates, if we look to a potential second round, Bolsonaro’s re-election prospects look slim due to his high rejection rate. According to a Datafolha poll, 51% of voters affirm that they would never vote for Bolsonaro, while only 37% make the same claim about Lula. Rejection rate is the crucial metric, according to the banking executive, “In this kind of elections it is not about convincing indecisive voters but having a lower rejection rate and the incumbent president is always going to fare worse than other candidates.”

“In this kind of elections it is not about convincing indecisive voters but having a lower rejection rate and the incumbent president is always going to fare worse than other candidates.”

Executive, private bank, São Paulo

Amid a global context of soaring inflation and in the aftermath of the Covid-19 tragedy, the main concerns for Brazilian voters are health and economic perspectives, the banking executive believed, “People are hungry, basic food costs are up and we’ve lost 680,000 fellow Brazilians in the pandemic. All amid gruesome handling of the pandemic which saw four different health ministers, including a military officer! Pathetic. People are hungry and dying, all other aspects are secondary.” Consumer prices in Brazil have risen by 11.9% from July 2021 to July 2022.

Whoever wins the keys to Brazil’s highest office, they face an enormous challenge to navigate the country through a growing list of looming crises.

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