Election Results Signal Widespread Economic Dissatisfaction, Experts Say
(Estadão) According to market participants, high interest rates and financial pressures have led voters to signal a preference for a change in government. Flávio Bolsonaro faces calls for concrete economic proposals, while Lula's main challenge is restoring credibility
Voters sent several messages through the ballot box on Sunday, October 4, putting Flávio Bolsonaro (PL) ahead of Lula (PT) in the presidential race and electing a more right leaning Congress. The main message, according to investment managers, is that economic conditions are difficult across the board. Households are burdened by debt and stagnant real wages despite full employment; companies across industries are increasingly turning to judicial restructuring as a lifeline; and financial institutions are also feeling the adverse effects of persistently high interest rates.
"No one is in a comfortable position," said Daniel Wainstein, co CEO of Seneca Group, which operates in mergers and acquisitions, asset management and banking. "People are in debt, companies are facing enormous difficulties, and there is a widespread feeling that money is tight." In his view, voters felt they were worse off at the end of Lula's third presidential term than when it began.
Rodolfo Riechert, CEO of Genial Investimentos, shares this assessment. "There is growing fatigue both with Lula himself and with the development model he has implemented, which relies on government investment," he said.
Michael Heydt, Senior Vice President of Global Sovereign Ratings at credit rating agency Morningstar DBRS, said there is "widespread anxiety" surrounding the high cost of living and current levels of household indebtedness. This combination gives Flávio a "powerful line of attack" heading into the runoff election.
Experts, however, expect Flávio to take more concrete steps, both by announcing fiscal policy measures and by identifying the individuals who would make up his economic team. "There needs to be a broader set of proposals demonstrating that interest rates could follow a different path from the one we are seeing today," Wainstein said.
Among the various adjustments that could be made to the federal budget, many would require congressional approval. According to Wainstein, the election of more right leaning lawmakers to both houses of Congress should make Flávio's task easier than the one Jair Bolsonaro faced at the beginning of his administration.
"Flávio should leverage his position in Congress to implement measures that may not be popular but would have a meaningful impact on long term interest rates," Wainstein said. "This should lead to cautious optimism for 2028, while 2027 is likely to be more challenging due to the necessary adjustments."
William Jackson, Chief Emerging Markets Economist at Capital Economics, said the Brazilian real's recent appreciation could continue if Flávio provides further details of his reform agenda. In his view, tighter fiscal policy would likely "give the Central Bank greater confidence" to ease monetary policy.
On the other hand, there is skepticism over whether Lula can reverse market expectations by appointing a figure more committed to fiscal responsibility or announcing measures capable of improving confidence in public finances.
"Lula needs to address fiscal austerity and the economy," Riechert said. "He needs to win back voters who are concerned about the signals being sent regarding future fiscal policy, by demonstrating that he will be more fiscally responsible. Taking money from the rich and giving it to the poor is no longer enough."
Heydt cautioned that Lula's political abilities should not be underestimated. "Although the first round of voting was relatively close, the political strength of a formidable, once in a generation politician like Lula cannot be dismissed," he said.
Published on 10/06/2026 and available at:
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