Brazil Presidential Race Heads for Runoff After Lula Falls Short

Andrew Rosati and Simone Iglesias
·6 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

(Bloomberg) -- Brazilian President Jair Bolsonaro fought his way through to a runoff election against Luiz Inacio Lula da Silva on Oct. 30, with his leftist challenger garnering the bigger share of votes on Sunday but falling short of the first-round win that some opinion polls had suggested he was headed for.

Most Read from Bloomberg

Lula, as he is universally known, took 48% to Bolsonaro’s 44%, Brazil’s electoral court said, with 98% of votes counted as of 9:41 p.m.

That tally leaves Lula without the simple majority needed for victory and sets the two up for a bruising face off in what has already been a divisive election campaign.

The outcome still puts Lula, 76, within reach of a another stint at the helm of Latin America’s largest economy -- he was president from 2003-2010. Brazilians face surging consumer prices and the economy is only just coming out of a pandemic-induced economic slump during Bolsonaro’s tenure. Lula, in contrast, stirs memories of past prosperity.

Speaking to supporters late Sunday in Sao Paulo, Lula likened the outcome to a sporting match that had gone into extra time. “I always thought we would win these elections,” he said. “And I still think that.”

But it’s a much closer margin than he would have wanted, and gives Bolsonaro, 67, four weeks to try to build momentum. Both candidates are pledging to keep and expand on social aid approved in the last stretch of the campaign to offset the pain of high prices.

Bolsonaro’s stronger-than-expected showing will likely give a boost to Brazilian assets, which had underperformed as polls signaled Lula could win outright on Sunday.

Even if Lula does win he may have a weaker mandate to pursue his left-wing agenda than some experts have anticipated, and face a less amenable Congress. In the Senate, many candidates supporting Bolsonaro were on track to win or already elected, including Vice President Hamilton Mourao, former Human Rights Minister Damares Alves, and former Science Minister Marcos Pontes. Bolsonaro’s allies won the race for governor in at least nine states.

A sense of frustration pervaded Lula’s headquarters as the count wrapped up. Campaign advisers were particularly disappointed at his performance in the state of Sao Paulo, the country’s largest electorate. The appointment of former Sao Paulo Governor Geraldo Alckmin as running mate was expected to boost Lula’s prospects, they said, asking not to be identified discussing internal strategy.

“All that is certain is that the far-right is extremely strong,” according to Carlos Melo, a political scientist at the Insper University in Sao Paulo. “And Jair Bolsonaro goes into the second round in a position of strength.”

A nationalist in the model of Donald Trump, Bolsonaro repeatedly called the electoral process into question even before the ballot, casting doubt on an electronic voting system that officials insist is robust and fair, and he may yet claim voter fraud for his inability to win outright in the first round. Electoral officials said voting on Sunday was largely peaceful.

Brazil Runoff Gives Traders Time to Ponder Market Moves: TOPLive

Bia Kicis, a lawmaker and an ally of Bolsonaro in congress, pushed back on the idea of rallying supporters behind claims of electoral fraud, saying the campaign will focus in the remaining weeks on trying to win back voters in the political center.

“They must realize Bolsonaro isn’t perfect,” she said. “But he is not a thief.”

While the Lula camp faced disappointment at the outcome, just three years ago the former president was sitting in a prison cell for corruption and money laundering and banned from holding office. Released on a technicality, the way opened for him to run after the Supreme Court quashed his convictions last year.

But if he does regain the presidency, he’ll be in charge of a different country.

Whereas he enjoyed record ratings as he rode a commodities boom during his first two terms, today’s Brazil is politically polarized and scarred by annual inflation running above 8.7% that’s squeezing regular Brazilians. Hunger is rising to levels not seen in well over a decade.

Lula has sought to turn that harsh reality to his advantage. To the poor, he pointed to good times when he ruled. “People need to be able to barbecue again,” he said. Lula previously battled throat cancer and has made clear he would govern for one term only.

Bolsonaro has promised to remain committed to a liberal agenda of privatizations and deregulation. Lula would strengthen public banks, boost the role of oil giant Petrobras in fuel production and launch a major infrastructure program. Neither has been specific about how they’d deliver on promises.

Still, Lula tapped a centrist former rival in Alckmin as his running mate. He also set out to unify a broad coalition of Bolsonaro opponents behind him.

That suggests a more mellow Lula if he wins a third term. In 2002, markets sold off when it became clear Lula would win, on fears he’d be a firebrand leftist. The local currency, the real, collapsed as traders braced for an economic shock.

Lula’s recent shift “substantially reduces any difference in the economics of his candidacy and Bolsonaro’s,” according to Adriana Dupita, Latin America economist with Bloomberg Economics. “The nod to the center spells some degree of commitment to fiscal responsibility.”

Victory for the Workers’ Party founder would still shift Latin America further to the left following the election of Gustavo Petro in Colombia and Gabriel Boric in Chile over the past year. The region, the world’s most unequal, has experienced post-pandemic upheaval with citizens using street protests and the ballot box to cast out leaders who failed to address poverty.

Unemployed cook Socorro Dos Santos, 48, voted Sunday in downtown Rio de Janeiro. She said times had become tough as prices kept rising, forcing her to choose between food or medicine for her husband, a diabetic. Bolsonaro dished out social aid “to buy people’s votes, but I voted for Lula twice and I’ll do it again,” she said. “I’m confident Lula will make things better again.”

In Brazil, Bolsonaro’s erratic actions seemed unsuited to the challenges the country faced. He drew widespread scorn for his handling of the coronavirus pandemic with the country recording more than 650,000 deaths, second only to the US. He became an international pariah for failing to clamp down on destruction of the Amazon rainforest. At home, he stoked fears of an authoritarian overreach with his constant clashes with the top court and other institutions.

In the end, what may cost Bolsonaro most with voters is their lack of faith in his ability to steer the $1.8 trillion economy, even as growth recovers from a Covid-induced slump.

Economists now see the economy expanding around 2.7% this year, and unemployment is at a seven-year low. But worries persist on how long the pick up will last after a year marked by record electoral spending.

Still, Bolsonaro still can rely on a sizable base, according to Rodolfo Costa Pinto, director of polling firm PoderData.

“A large slice of the population will stay with the president regardless of what his job approval is,” he said. “It points more to a question of identity than pragmatism.”

Known for his coarse style and embrace of Brazil’s past military dictatorship, the former army captain appealed to many on a God-fearing, business-friendly platform promising to be tough on graft and crime. “Only God can remove me” from power, he has repeatedly said.

(Updates with detail, comments throughout)

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.