Brazil’s Lula and Flavio Bolsonaro head into Sunday’s runoff with polls near a tie

Brazil votes on Sunday in a presidential runoff between leftist incumbent Luiz Inácio Lula da Silva and right-wing Senator Flavio Bolsonaro^1,7. Flavio Bolsonaro is the son of former President Jair Bolsonaro¹. The two candidates were set to clash once more before the vote².

The polls give a mixed picture. Flavio Bolsonaro holds a small but narrowing lead over Lula in polls¹, while pollsters point to a technical tie³. The race is deadlocked ahead of Sunday’s vote⁴.

Foreign diplomats in Brazil are discussing quick recognition of the runoff winner¹. Many on the left are haunted by Jair Bolsonaro’s presidency from 2019 to 2022, and leftists have taken to social media and the streets to push for a Lula win⁶.

Why it matters to investors

Flavio Bolsonaro promotes the hardline security rhetoric of other right-wing leaders across Latin America and promises to lower the cost of living². Lula has hinted at appointing a right-wing finance minister¹⁰. One account points to a firebrand pastor who could hand the right victory⁷.

Whoever wins will have to balance strong ties to both China and the United States⁴. Brazil faces weaker growth amid pressure for fiscal control measures⁹. Economic worries abound before the runoff, and the number of unionised workers in Latin America’s biggest economy has shrunk by almost half in the last 15 years⁵.

Energy policy may hold after the vote. Lula’s administration has celebrated new oil discovery and exploration efforts, and Brazil’s energy course may hold after the election, although the Amazon is at risk, according to one analysis¹¹. The runoff is also a test for the region’s politics: Latin America’s rightward surge reaches a crossroads in Brazil¹⁰, even as support slips for the region’s new right³.

What to watch

The first marker is the result on Sunday and how quickly foreign governments recognise it¹. The polls, split between a narrow Bolsonaro lead and a technical tie, point to a close result^1,3.

After the vote, investors will watch the choice of finance minister, given Lula’s hint about a right-wing pick, and the response to pressure for fiscal control measures^9,10. Latin America’s right-wing leaders have pivoted to a new approach, and the runoff will show whether the region’s rightward surge reaches its biggest economy^8,10. Fiscal policy is the area most exposed to the result, given the pressure for control measures as growth weakens⁹.