A difficult runoff for Lula and other weekly topics
The Supreme Federal Court (STF) will decide whether to investigate Justice Alexandre de Moraes based on a Federal Police report pointing to an alleged connection between him and former banker Daniel Vorcaro, who is currently in custody. On the economic front, attention will focus on the Central Bank meeting to decide the benchmark interest rate.
This week's Talking Points:
* The Moraes Case—Supreme Court decision scenarios and their impact on the presidential race: Both presidential candidacies face significant vulnerabilities and potentially unpredictable consequences from the current crisis in the Supreme Court. The question is which candidate will ultimately be affected the most. So far, the political balance has been more damaging to Lula.
* The STF crisis and public opinion: The serious institutional crisis affecting the Supreme Federal Court (STF), although widely known among the public, has had little effect on voters’ current presidential preferences. However, a small segment of voters acknowledges that it could change their minds about their presidential vote.
* A series of crises increases pressure on Lula: President Lula is facing growing political pressure as the election approaches. In recent weeks, a series of episodes involving institutional disputes, investigations, and work stoppages at state-owned companies have drawn increasing attention. At the same time, recent polls show a more competitive race in a potential runoff election.
* Lula seeks to narrow the gap in the South: President Lula (PT) is traveling through Brazil’s Southern Region this weekend, where he faces high rejection rates, weaker support than in 2022, and gubernatorial candidates whose political standing is unfavorable to him. The region, however, still has a significant share of undecided voters.
* A runoff will likely be difficult for Lula: The presidential succession currently presents an unfavorable environment for the administration in a runoff, due to the following factors: 1) the government’s disapproval rating exceeds its approval rating; 2) the political agenda is dominated by issues unfavorable to the president, such as corruption and public security; and 3) perceptions of the economy are negative, the result of high household indebtedness and food prices. In addition, because most voters supporting the main candidates positioned “outside the polarization” are more closely aligned with Senator Flávio Bolsonaro than with Lula, a runoff is likely to be difficult for the President.
* Flávio vs. Lula in key states: Although Lula has improved his performance relative to 2022 in Rio de Janeiro and Pernambuco, the overall balance is more favorable to Flávio. This is primarily due to the senator’s gains in Minas Gerais, a key swing state in the presidential election. Another factor to watch is the still-significant share of undecided voters in São Paulo, Minas Gerais, and Rio de Janeiro. Because government disapproval exceeds 50% in these states, these undecided voters currently appear more likely to lean toward Flávio than toward Lula.
* Few changes — if any — in the next Lower House: Looking at the National Congress, and more specifically at the Lower House — the body that most closely reflects the average composition of Brazilian society — it is clear that the structure of political power encourages continuity. The prospect of remaining in power is very real, as only 14 lawmakers will not contest this year’s elections. All the others — roughly 97% of the House — will either seek reelection or run for another office. This confidence in the possibility of electoral success is largely explained by the power of budget amendments.
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