Relaxed financial markets look at Lula’s comeback

The first electoral round was won by former President Lula. However, the incumbent, Bolsonaro, performed better than expected. Their economic agendas differ on a number of issues, while risks are more asymmetric under each candidate. Either could benefit from a robust macroeconomic scenario.

The first round of Presidential election took place on 2 October. As expected by great majority of polls, the Workers’ Party’s candidate and former president Luiz Inacio Lula da Silva led after the first round and came close to winning the election outright, as predicted by several polls. However, traditional pollsters were wrong when it came to the result of incumbent president Jair Bolsonaro, who outperformed and narrowed the gap to Lula to a mere 5 percentage points(pp) (48% to 43%), while the spread projected by polls was almost double on average.

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