Brazil will remain polarised ahead of the October 2022 general elections as voters’ options will likely be limited to far-right President Jair Bolsonaro and former President Luiz Inácio Lula da Silva (2003-2010), from the centre-leftist Workers’ Party (PT). In an environment with persistently high unemployment, and food, fuel and energy costs deteriorating Brazilians’ living standards and exacerbating inequality, the electorate will mobilise, for and against. 

Supporters from both sides will continue to organise sporadic, predominantly peaceful demonstrations. Risks of political violence will likely be limited to threats by small (but radicalised) groups or lone wolves, while widespread civil unrest remains unlikely.

With the economy in the spotlight, Bolsonaro will seek tactical ways to alleviate the impacts of the challenging socio-economic landscape by increasing public expenditure. That will result in reduced policy predictability and heightened financial volatility. As the president and legislators prioritise their electoral prospects, pro-business initiatives like structural reforms will make little (if any) progress in Congress. Uncertainty around the election outcome and tight monetary policy to fight inflation will postpone investment decisions and limit economic recovery. That will expose companies to a relatively challenging business environment in the one-year outlook, making 2022 a year with limited overall upside potential.

The race will be an uphill battle for Bolsonaro, and an uptick in his popularity is unlikely. While Lula has been leading the polls, he will become an easy target for other candidates’ criticism once campaigning starts in August. In addition to the multiple corruption scandals under the PT administrations, the business community and international investors remain sceptical about his potential economic plans.

The advantage both politicians currently have in the polls will erode in the next few months. The question for centrist candidates from the so-called “third way” is the pace at which that happens and if they can take advantage in time.  

That would require the coordination of different actors around a few (if not a single) names. Potential contenders include Senate’s (upper house) Chairman Rodrigo Pacheco (PSD), former National Integration Minister Ciro Gomes (2003-2006, PDT), São Paulo Governor João Dória or Rio Grande do Sul Governor Eduardo Leite (PSDB) and former “Car Wash” judge and Justice Minister Sérgio Moro (2019-2020, Podemos). The longer moderate potential candidates remain dispersed across parties, the harder it will be to secure a spot in the run-off vote.

While Bolsonaro’s and Lula’s high rejection ratings have so far divided voters, they also represent an opportunity for centrist leaders. However, antagonising the current and former presidents will not be enough. A successful alternative candidacy will require a platform to address Brazil’s challenges – and so far, there has been little progress on that front. If a moderate candidate were to emerge, they would need to overcome these obstacles early in 2022 to become competitive; although unlikely, that is still possible.

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