Lula netted a goal in Egypt at COP27 in the fight against climate change. However, it was an own-goal on the spending front that unsettled the markets and threw doubt on expectations of a prudently populist policy direction. We still believe Lula’s policies will be of a centre-left nature, with the help of the markets, though risks have risen.
Exactly one week after China’s Xi Jinping became the country’s three-term president, Luiz Inácio Lula da Silva (Lula) was elected as the head of the Brazilian state for the third time himself. Unlike in China, the presidential election in the Latin America’s BRIC representative was contested very closely. As expected, Lula defeated the sitting president 51-49% on average, but by the narrowest of margins (1.7pp) in the country’s elections history.
Lula’s victory also marked the region’s record books. All four presidential contests (Peru, Chile, Colombia, and now Brazil) over the past 18 months have been won by leftist candidates. However, the political pendulum has not exactly shifted leftward in Brazil, and there are signs it is shifting in the other direction in the rest of the region, as well, as Chileans overwhelmingly rejected the leftist new Constitution, for instance. This supports the view that the region voted against the establishment, rather than for the left.
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