Brazil Heads to a Presidential Runoff
Senator Flávio Bolsonaro finished narrowly ahead of President Lula in the first round. The two meet again on October 25, and Brazilian markets have already reacted.
What the first round showed
Brazil’s presidential election will be decided in a runoff on October 25. In the first round on October 4, Senator Flávio Bolsonaro of the Liberal Party (PL), a son of former President Jair Bolsonaro, received 47.03% of valid votes. President Luiz Inácio Lula da Silva of the Workers’ Party (PT) received 45.16%. The campaign focused on the cost of living, corruption and public safety, Reuters reported. Abstention, at 21.08%, was the highest since 1998. Starting next year, the PL will hold more seats than any other party in both the Senate (28 of 81) and the Chamber of Deputies (121 of 513), according to Americas Quarterly.
The result differed from most pre-election polls. Datafolha’s final survey, taken the day before the vote, had Lula ahead 45% to 42% among valid votes. Prediction markets moved after the count. On October 7, Polymarket priced Bolsonaro’s chance of winning the runoff at about 85%, up from roughly 60% before the vote, according to The Rio Times. Kalshi, a US exchange regulated by the CFTC, showed a similar level. These prices reflect traders’ bets, not polls, and can change quickly. The first runoff polls are due on October 8.
Brazilian assets moved sharply on the result. On October 5, the Ibovespa stock index rose 7.7% to 206,912 points, its largest one-day gain since March 2020, and the real gained about 4% against the US dollar, Reuters reported. Investors read the outcome as improving the chances of a more fiscally conservative government. Analysts also pointed to limits. Andrés Abadía of Pantheon Macroeconomics noted that whoever wins will face rising mandatory spending and high debt-service costs. Alessandra Ribeiro of Tendências Consultoria told Americas Quarterly that the risk of disappointment on fiscal adjustment is significant. Brazil’s public debt is above 82% of GDP.
The three weeks before the runoff leave room for change. The União Brasil–Progressistas federation, which won 87 lower-house seats, has endorsed Bolsonaro, as have eliminated candidates Ronaldo Caiado and Romeu Zema. The PSD stayed neutral. Lula is focusing on his base in the Northeast and on voters who stayed home. Endorsements do not transfer votes automatically, and about 9.3 million votes went to other candidates. In the 2022 runoff, the closest in Brazil’s history, Lula won with 50.9% to 49.1%. The winner will lead Brazil from January 2027.
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