Pantheon Macroeconomics

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2nd Nov 2022 11:13Question of the week

Brazil’s presidential election was a nail-biter, but the left-leaning Lula da Silva, “Lula”, clinched it in the end, with 50.9% of the votes against the incumbent Jair Bolsonaro’s 49.1%. This result was in line with 
polls ahead of the vote, indicating that markets are unlikely to kick up a major fuss, unless Mr. Bolsonaro attempts to hold on to power, claiming fraud or some other irregularity. Looking ahead, the near-term response by markets to the new president depends on who is appointed to key positions in the cabinet, including the finance ministry. Lula’s biggest challenge is the need to balance demands 
from his own supporters with the requirement to drive policy through a right-leaning, and potentially hostile, Congress. If pragmatism prevails, markets will benefit from a less-volatile macro environment under Lula. Here’s hoping.

Andres Abadia, Chief LatAm Economist

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