Brazilian real suffers from opinion polls for the presidential election

The latest opinion polls have basically confirmed the previous trend in the Brazilian presidential election, with ex-president Lula even extending his lead somewhat. The only problem with these opinion polls is that Lula will presumably not be able to run in the elections. He is serving a long prison sentence for corruption and is, therefore, not eligible for election under current legislation. So the courts are likely to remove him from the electoral list. Lula’s party, the opposition workers‘ party (PT), is apparently seeking to prolong this as long as possible in order to win time to make substitute candidate Haddad more popular. So far they have only managed this to a limited extent but the public election campaign with television advertising does not begin until the end of the month.

In the opinion polls excluding Lula the far-right candidate Bolsonaro has a clear lead over a broad field of pursuers, whose shares of the vote differ only a little. In a paired survey for a choice between Bolsonaro and a possible opponent for the second round Bolsonaro is unable to defend his lead. He has spooked broad sections of the electorate with racist and sexist comments. The differences in the shares of the vote for the second round are too small to be statistically significant so the outcome is completely uncertain. The hope of the financial markets’ favourite candidate, Alckmin, that he will still be able to increase his share of the vote appreciably thanks to his greater presence in election advertising in television could turn out to be too optimistic. At least Bolsonaro already appears to be too far ahead of him. But the financial markets and thus the real, too, are also well able to live with the economic policy programme of the far-right candidate Bolsonaro who is in favour of greater independence for the central bank and a conservative fiscal policy combined with a simultaneous and gradual reduction of taxes. Pension provision is to be complemented with a capital-funded scheme.

On the other hand, the PT should still be able to bring together a notable part of potential Lula voters behind Haddad, who could thus make it to the second round. Like Ciro Gomes, another well positioned candidate, the PT’s manifesto calls for a greater orientation of monetary policy to an employment target. A central target in the left-wing camp is also the reversal of important reforms carried out by the current government. In particular, the long-term spending limit is a thorn in the flesh of the candidates.

Alone the prospect of a left-wing president is likely to put the Brazilian real under further pressure in the next few weeks. At the moment, however, the environmental activist Silva, who does not belong to the  left-wing camp as regards economic policy, is still in second place and has a good chance of beating Bolsonaro in a run-off vote.

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