Lula wins Brazil run-off by nearly four points as markets slump and Bolsonaro contests

The result

Luiz Inácio Lula da Silva kept the presidency in Brazil's run-off on 25 October, winning by nearly four points over Flávio Bolsonaro. Official figures gave Lula 51.79% of the vote against 48.21% for Bolsonaro. Lula had trailed in the first round, where Bolsonaro finished ahead, and no candidate has ever come from behind in that way to take the presidency. In Minas Gerais, the second-largest electorate after São Paulo, Lula won by a little over 100,000 votes out of more than 13 million cast. In January he will begin a fourth term, the first time a democratically elected Brazilian president has started one.

An editorial in La Vanguardia credits Lula's campaign with bringing back about ten million first-round abstainers, backed by a heavy presence online, including a WhatsApp group called Ejército de Lula that had ten million members before the run-off.

Markets react

Markets reacted sharply to the outcome. On news of Lula's victory the real fell 7% against the dollar and the Bovespa index dropped 14%, tripping a circuit-breaker on the way down.

Real against the dollar-7%

Bovespa index-14%

Real against the dollar

-7 %

Bovespa index

-14 %

Data from the article text

Investors fear that the government will keep spending beyond what Brazil can afford, since successive administrations, Lula's included, have run wide deficits. The budget deficit is above 9%, and the real interest rate stands at 9%, which weighs on investment, squeezes businesses and households, and holds back growth. Brazil pays more interest on its debt, as a share of its finances, than all but a tiny handful of big countries.

Flávio Bolsonaro contests the count

Flávio Bolsonaro has not accepted defeat. He has challenged the results and asked for the vote to be repeated, objecting to a two-hour extension of polling hours. Judge Cristiano Zanin of the Federal Supreme Court ordered the extension nationwide at 17:01 local time, when polling stations were due to close, citing transport problems. Bolsonaro called the decision unacceptable and accused Zanin of changing the rules in the middle of the game and breaking equality between voters in different cities and states. According to the La Vanguardia editorial, both campaigns had formally asked the courts to extend voting because of the collapse of transport in big cities and heavy rain in the south.

Party and opposition

On Monday, 26 October, the Liberal Party, which fielded Flávio Bolsonaro, said in a letter from its president, Valdemar Costa Neto, that it recognised the result proclaimed by the Superior Electoral Court. The party asked that the doubts raised by Bolsonaro be properly clarified. Flávio Bolsonaro said he would organise the opposition for Lula's new term and meet the deputies and senators elected under his party. His father, Jair Bolsonaro, is a former president serving a 27-year sentence for plotting a coup, and he did not accept the result when he lost to Lula four years ago.

An El Mundo editorial notes that the right now has a stronger presence in Congress, so Lula will have to build agreements beyond his own coalition. It also argues that voters who backed Lula to stop a return of the Bolsonaros did not give the Workers' Party an unconditional mandate. The same editorial says the result keeps Brazil, alongside Mexico, as the main progressive bastion in Latin America.

What comes next

The Economist argues that Lula has little time to persuade investors that he will change course in his final four years. Flávio Bolsonaro had talked about cutting spending, which pleased markets, but offered no credible plan to do so. Cutting government spending is widely seen as the key step, and the El Mundo editorial links economic stability to political reconciliation. Lula's fourth term starts in January.