Brazil’s fundamentals are among the strongest in emerging markets. Its public finances are not. Whoever takes office in January inherits gross debt above 80% of GDP, a nominal budget deficit close to 10% and one of the highest real interest rates in the world.
Brazil’s vote matters. Its debt matters more
A race decided inside the margin of error
Brazil holds its general election on 4 October, with a presidential run-off on 25 October. On current polling a run-off is all but certain, and the two names on that second ballot are almost certainly President Luiz Inácio Lula da Silva and Senator Flávio Bolsonaro, the eldest son of the imprisoned former president. While the first round looks settled, the second does not. The run-off simulations have converged on a statistical dead heat. This is a coin toss, and it may stay one into the final week.
Markets have begun to react, but in a race this close, small shifts could still prove decisive in a race this close.
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