Brazilian markets got very bullish after learning about the results of the first round of the presidential elections. To some analysts, a much narrower-than-expected gap between frontrunner Luiz Inácio Lula da Silva and incumbent Jair Bolsonaro created a win-win scenario for Brazilian assets: it showed that Mr. Bolsonaro could still flip the election in the runoff, which should force Lula to keep leaning to the center.
So, the economic policy from next year would be either more Paulo Guedes (I will leave my evaluation of his performance to a future article, but markets still seem to like him, at least in comparison to the alternatives), or something resembling Lula’s first term (2003-2006).
Upon taking up the presidency, Lula assembled a team of competent technocrats led by a skilled politician from the president’s inner circle that delivered massive fiscal consolidation, bringing the gross debt-to-GDP ratio down from 76 percent in 2002 to 55 percent in four years.
Over the past few weeks, Lula’s campaign gained the support of some of the country’s most respected economic policymakers, among others, the team behind the Real plan — which stabilized the economy after decades of high inflation — and the pro-market agenda of the...
Search
