Brazilian president Luiz Inacio Lula da Silva has been narrowing the gap to senator Flavio Bolsonaro's lead in polls, but Lula still lags his challenger just days before the presidential election runoff set for 25 October.
Opinion polls indicate that the contest remains close, with right-wing Bolsonaro holding a narrow advantage. A 21 October average of multiple polls by independent polling tracker Votendi put Bolsonaro at 51.2pc and Lula at 48.8pc, a 2.4 percentage-point gap. The margin of error is of 2.2 percentage points.
Bolsonaro finished the first round of votes with 47pc, ahead of Lula's 45.16pc, leaving the two separated by about 2.2mn votes.
Lula has aimed at undecided voters to narrow the gap, with more than 33mn Brazilians not voting in the first round. He sought to broaden his appeal since the first round by embracing several proposals aimed at conservative-leaning voters, including tax amnesty, debt renegotiation for microentrepreneurs and a lower age of criminal responsibility. He also proposed free weekend bus travel and earlier payment of the federal social welfare program, ideas that might appeal more to his left-wing base.
Labor policy has been one of the clearest dividing lines of the campaign. Lula has championed a recently approved reduction in working hours, while Bolsonaro's allies have argued for greater labor-market flexibility, including wider use of hourly employment contracts.
Meanwhile, Bolsonaro has focused on the economy. He promises to cut R200bn-250bn ($39.8bn-49.7bn) from the federal budget, which financial markets view favorably.
He has also promised to allow individuals to suspend repayments on personal debts for six months and for businesses to hold off for as long as a year.
While the election campaigns have featured little debate over energy, investors remain focused on potential implications. A Lula victory would likely reinforce the government's approach to energy transition policies, including support for biofuels and renewable energy investment. Bolsonaro has generally favoured fewer environmental restrictions and could seek to accelerate licensing processes for agriculture, mining and oil.
Energy markets are unlikely to face immediate disruptions under either candidate, given Brazil's importance as a major exporter, but differences in environmental policy and infrastructure investment could influence longer-term prospects.
Corruption standoff
Corruption allegations have dominated the campaign's final stretch.
Bolsonaro has focused on the Operation Car Wash anti-corruption probe, which sent Lula to jail in 2018 on money laundering and corruption counts. He was later acquitted and freed in 2019.
Lula's campaign has accused Bolsonaro of money laundering and corruption scandals during the Covid-19 pandemic — when his father Jair Bolsonaro was president. It also has tried to tie him to Rio de Janeiro's militia — illegal mafia-like vigilante paramilitary groups. Bolsonaro denies any wrongdoing, saying there is no material evidence of participation in criminal schemes, extortion or the command of paramilitary groups.
Lula has further challenged Bolsonaro to disclose his banking and telephone records to prove he is clean, saying he would do the same. Bolsonaro responded by demanding records for people close to the president. Lula obliged.
A recent Quaest survey found that 52pc of voters disapproved of Bolsonaro, compared with 47pc for Lula.The same polling shows that 44pc of voters fear a Bolsonaro return to power, against 42pc who fear a Lula re-election.
Institutional impact
The runoff's result will have lasting consequences for Brazil's institutions, as Bolsonaro promises to revamp the judicial system and the constitution.
Changes would include abolishing the right to re-election for executive branch offices and extending presidential and gubernatorial terms to five or six years from the current four. He says he would also promote changes to the supreme court's structure and powers, redefining the relationship between branches of government.
Overhauling the judicial system or parts of the constitution would require the backing of large congressional majorities. Brazil also held legislative elections on 4 October, with Bolsonaro's Liberal party securing sweeping victories. It will hold 121 seats in the 513-member lower house and 28 in the 81-member senate. Therefore, Bolsonaro would likely face little resistance to enact changes.
The next president will nominate four or five supreme court justices. One seat is vacant, three others will retire by 2030 and judge Alexandre de Moraes could face impeachment pressure from the right-leaning congress. Moraes is seen as a Lula ally and emerged as a leading figure in the judiciary, especially for his role in high-profile investigations involving Bolsonaro and his allies. Those included the one that sent Jair Bolsonaro to jail for 27 years for attempting to overturn the result of the 2022 election following his defeat to Lula.
Flavio Balsonaro would also likely attempt to win amnesty for his father in case he wins.
Foreign policy
Bolsonaro would probably pursue closer relations with US president Donald Trump after tariffs strained ties under Lula.
His victory would add Brazil to a regional shift towards the right, following conservative electoral gains elsewhere including in Argentina, Chile, Colombia, Peru and Ecuador. But it could weaken Brazil's claim to leadership in developing economies globally and diminish its role in international climate negotiations.
