The Week Ahead in Brazil #121

What is happening in Brazil?

1. Politics – Marina Silva, a former minister and former presidential candidate, announced her support for candidate Luiz Inácio Lula da Silva (PT). She is running for federal deputy for São Paulo (Poder360)

Justice Rosa Weber was sworn in as president of the Federal Supreme Court (STF) on Monday (12). President Jair Bolsonaro (PL) did not attend the ceremony, which included the presidents of the House and Senate. The president’s Chief of Staff, Ciro Nogueira, and the Minister of Communications, Fábio Faria, represented the Executive, but they left before the pronouncement of Justice Weber. (Valor)

The FSB/BTG survey shows Luiz Inácio Lula da Silva (PT) leading the voting intentions in the first round with 41% (-1pp), followed by Jair Bolsonaro (PL) with 35% (-1pp). The government is considered “bad/terrible” by 44% (-2pp) of the population and “great/good” by 34% (+1pp). The disapproval rate is 56% (-1pp) and the approval rate is 38% (-stable). The poll was conducted by telephone with 2,000 voters between 9 and 11 September.

The Ipec/Globo poll points out that Lula (PT) has 46% (+2pp) of voting intentions in the first round against Bolsonaro (PL), who has 31% (stable). The government is disapproved by 59% (+2pp) and approved by 35% (-2pp). The administration is considered “bad/terrible” by 45% (+2pp), and “great/good” by 30% (stable). The poll was conducted face-to-face with 2,512 voters between 9 and 11 September.

The Quaest/Genial poll shows Lula (PT) with 42% (-2pp) and Bolsonaro (PL) with 34% (stable). The disapproval rate stood at 38% (-1pp) and the approval rate at 32% (stable). The poll heard 2,000 voters in person from September 10 to 13.

According to PoderData, Lula (PT) has 43% (stable) against Bolsonaro’s 37% (stable). The survey interviewed 3,500 people between 11 and 13 September.

Datafolha indicates Lula (PT) with 45% (stable) and Bolsonaro with 33% (-1pp). The survey interviewed 5,926 voters, face-to-face, between 13 and 15 September.

Ipespe/Abracel shows Lula (PT) with 45% (+1pp) and Bolsonaro with 35% (-1pp) of the voting intentions. The survey interviewed 1,100 voters, by phone, between 14 to 16 September.

Here is a compilation of the latest electoral surveys:

2. Economy – Petrobras announced a new cut in gasoline and cooking gas prices. The litre of gasoline was reduced by 2.5%. The cooking gas price was also reduced by 4.7%. (Folha)

The volume of services in the country grew 1.1% in July 2022, compared to June. With this result, the sector is 8.9% above the February 2020 level, pre-Covid-19 period. The data are from the Monthly Services Survey (PMS), released by the Brazilian Institute of Geography and Statistics (IBGE). (Brazil)

The volume of restricted retail sales fell by 0.8% in July, compared to June.  According to the Monthly Trade Survey (PMC), the July decrease was the highest for the month since 2018. The only sector with an increase in July is fuels and lubricants (12.2%). (Valor)

The Brazilian trade balance surplus rose 86.3% in September, until the second week of the month, reaching US$ 2.34 billion. The trade flow in the period increased 32.6% and reached US$ 16.80 billion, reflecting an increase of 37.4% in exports, which reached US$ 9.57 billion, and 26.7% in imports, which totalled US$ 7.23 billion. (Brazil)

The Central Bank’s Economic Activity Index (IBC-Br), known as a preview of the Gross Domestic Product (GDP), rose 1.17% in July compared to June, the best result for the month since 2014. This was the second consecutive advance and surprised market expectations, which pointed to a high of 0.30%. In June, the high had been 0.93%. (CNN)

According to the Macrofiscal Bulletin, the Secretariat of Economic Policy (SPE) revised Brazil’s GDP for 2022 from 2.00% to 2.70%. The expectation for the inflation rate (IPCA) retreated from 7.20% to 6.30 for 2022.

The Brazilian agricultural harvest reached a record production value of R$743.3 billion in 2021, an increase of 58.6% over the performance recorded in the previous year. The data is from the Brazilian Institute of Geography and Statistics (IBGE).

3. Public administration – The Superior Electoral Court (TSE) passed a resolution that regulates the number of ballot boxes that can be used in the integrity test held on election day, as suggested by the Armed Forces. The Court will test between 32 and 64 ballot boxes. (Estadão)

The average time it takes to open a company in Brazil has fallen to 23 hours, the shortest average time ever recorded. The current level represents a drop of 17 hours (42.5%) compared to the end of the first four months of 2022, which ended in April; and of one day and 17 hours (64.1%) compared to the end of the second four months of 2021. (Brazil)

The Supreme Court (STF) has formed a majority to maintain the suspension of the nursing minimum wage. The validity of the law will remain suspended for the indication of the source of funding.

President Jair Bolsonaro travelled to London on Saturday, to attend the funeral of Queen Elizabeth II on Monday (19) at Westminster Abbey. Bolsonaro will fly to New York after the ceremony for the United Nations General Assembly.

An analysis:

1. The trend in politics is positive. In the last weeks before the election, with low parliamentary activity, the scene continues favourable to the policymaking process between the Executive and Legislative. After 7 September, Bolsonaro avoided taking part in other branches’ official ceremonies, to prevent hearing unpleasant remarks. Despite this distance, the level of institutional conflicts is low. The level of popular support remains stable.

The electoral scene points to a tight dispute between Lula and Bolsonaro. According to the surveys, the voting intentions are converging, closing the gap by the day, and indicating that Brazil follows divided and polarised. Since January 2022, the average gap between the two main candidates dropped from 17 to 9 points this week. Nonetheless, a major pollster, Datafolha, shows a 12-points gap.

2 The trend in the economy remains positive. July’s GDP forecast exceeded the market’s expectations. According to the Ministry of Economy and financial institutions, the inflation trajectory is declining. Itaú, for example, revised it from 7.0% to 6.0% in 2022.

Next week, the Central Bank will discuss whether or not to change the interest rate. The market estimates no change in the rate of 13.75%.

3 The public administration is on a neutral trend. The decision to suspend the minimum wage for nursing professionals was confirmed by the Federal Supreme Court, providing more legitimacy to the decision. Senator Rodrigo Pacheco (PSD-MG), the Senate president, said he will mobilise National Congress political leaders to find a speedy solution to the case.

The responsiveness of the electoral court (TSE) in adopting the integrity test for the electronic ballot boxes with biometrics was a positive aspect, although most newspapers framed the issue as a concession from the TSE to the Ministry of Defense or that the decision was an honourable way out for the Armed Forces. The main point is that the measure represents an improvement in the electronic electoral system.

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