How market-friendly are Brazil’s presidential candidates? Part II

How market-friendly are Brazil’s presidential candidates? Part II

Brazil’s resilience has been put to the test in the last couple of years. The country has faced its worst economic recession, the impeachment of President Dilma Rousseff, and corruption accusations against its current president, Michel Temer. The 2018 presidential election is set to be the “election of hope” for the people of the country, but so far the race is wide open. GRI’s Lorena Valente revisits the candidates and how their views on the economy have evolved in recent months – or not.

Current polls

Less than two months before the Presidential election, the latest poll still shows a wide-open race. According to the Datafolha poll of August 21, 2018, Lula (PT) is still polling first with 39% of the intention of vote, followed by Jair Bolsonaro (PSL) with 19% and Marina Silva (Rede) with 8%. Other notable candidates include Geraldo Alckmin (PSDB) with 6% of the intention of vote, Ciro Gomes (PDT) 5%, Joao Amoedo (NOVO) 2%, and Henrique Meirelles (MDB) 1%.

However, per the Clean Slate Law, Lula, who has been in prison since April, would not be allowed to run and he has not participated in the debates. It is also unclear if he would be able to transfer his votes to PT’s plan B, – Fernando Haddad. The Superior Electoral Court (TSE) is expected to make a final ruling on Lula’s ability to run in the next couple of weeks.  

In a race without Lula, Jair Bolsonaro continues to poll first with 22% of the votes, followed by Marina Silva with 16%, Ciro Gomes 10%, and Geraldo Alckmin 9%.

Market friendliness

Based on the candidates’ updated economic platforms listed on the table below, the following ranking defines candidates’ market friendliness, commitment to fiscal balance and pension reform, and overall economic plan.   

Ranking is from most to least market-friendly

For the market and businesses, the next President should prioritize increasing productivity and fostering economic growth by creating certainty on what is yet to come in their Presidency. This can be done not only by setting specific and attainable economic goals but also by keeping a low level of volatility. In particular, market friendliness is measured by platforms that focus on an increase in investment—particularly in infrastructure—maintaining a spending ceiling, reducing bureaucracy of the state, simplifying the tax regime, inserting Brazil into the global economy, committing to pension reform and increasing efficiency by privatizing certain state owned enterprises.

The top four candidates for market friendliness are particularly opposed to the interventionism and protectionism implemented by the governments of Lula da Silva and Dilma Rousseff that led to economic recession. Joao Amoedo, who ranks first in market friendliness is a candidate that is slowly becoming well known and increasing his percentage of vote intention. He is part of NOVO (“New Party”) political party, which stands for bringing a new viewpoint to Brazilian politics after years of dissatisfaction with the political establishment.

Proposed economic platform

brazil candidate platforms 2018

Categories: Economics, Latin America

About Author

Lorena Valente

Lorena Valente is an Associate at Promontory Financial Group, an IBM company. Previously, she was a Consultant for the World Bank Macroeconomics and Fiscal Management Brazil Team. She has also held positions at the Inter-American Development Bank, Albright Stonebridge Group, and McLarty Associates where she performed political and economic risk analysis for Latin America, with a special focus on Brazil. She earned her MA in International Economics and Latin American Studies from Johns Hopkins SAIS, and her BA summa cum laude in Political Sciences from the George Washington University. Originally from Brazil, she speaks Portuguese, Spanish, and English. *Views and opinions expressed are the sole responsibility of the author and are not endorsed by Promontory.