20171106-法国巴黎银行-Brazil__2018_election_roadmap_8页_509kb

Brazil: 2018 Election Roadmap Summary

Core Content

The document outlines the political and economic landscape in Brazil leading up to the 2018 presidential election, emphasizing the potential for volatility, the expected shift in political alignment, and the influence of economic recovery on the election outcome.

Main Points

1. Campaign Timeline and Key Dates

• The 2018 election process has a compressed timeline with several critical deadlines:
  • 06 April 2018: Deadline for executive office holders to leave their positions.
  • 06 March 2018 - 06 April 2018: Period for members of Congress to change parties.
  • 15 August 2018: Deadline for candidate registration with the Electoral Justice and the start of the first round of the campaign.
  • 31 August 2018: Launch of publicly funded advertising.
  • 04 October 2018: End of the first round campaign.
  • 07 October 2018: First round election day.
  • 25 October 2018: End of the second round campaign.
  • 28 October 2018: Second round election day.

2. Political Dynamics and Candidate Landscape

• Political jockeying has already begun, and the campaign is expected to intensify in Q2.
• The main risk scenario involves two extreme candidates (likely left and right) reaching the runoff.
• Despite this, the document assumes a constructive base-case outcome with continuity in current economic policies.

3. Opinion Polls and Rejection Rates

• Early polls are not reliable for predicting voter intentions but indicate high rejection rates for some candidates.
• Lula has a 42% rejection rate, suggesting he may not be a viable candidate.
• Jair Bolsonaro has a 33% rejection rate, also indicating potential challenges.
• Analysts believe Lula is unlikely to be an official candidate due to these high rejection rates.

4. Economic Recovery and Reformist Candidates

• The improving economy is expected to support reformist candidates.
• GDP growth is forecasted at 1.0% in 2018 and 3.0% in 2019.
• Inflation is expected to remain below the 4.5% target.
• Interest rates are likely to stay on hold after reaching all-time lows.

5. Policy Proposals and Political Alignment

• Candidates are expected to propose opposing economic policies.
• Left-leaning candidates may advocate for a larger government and reversing current reforms.
• Centre-right candidates are expected to support the ongoing reform agenda, including privatization and concessions.

6. Public Sentiment and Anti-Corruption Trends

• Public distaste for politicians has grown due to corruption scandals.
• Voters are increasingly supportive of market-friendly policies, such as privatization.
• The success of João Doria in São Paulo, who supported privatization, reflects this trend.

7. Congressional Shift and Senate Composition

• The legislative election will also take place, with 45% of Lower House seats up for grabs.
• In the Senate, two-thirds of seats are up for re-election.
• Several left-leaning senators, previously supported by Lula, are at risk of losing their seats due to reduced public approval.
• The Senate is expected to shift more towards the centre-right.

Key Information

• The political landscape is shifting, with a likely move from left to centre-right.
• Economic recovery is expected to benefit reformist candidates.
• High rejection rates for Lula and Bolsonaro may impact their viability in the election.
• The shortened campaign period and early candidate registration deadlines may increase uncertainty.
• The document is a non-independent research communication and is subject to legal disclaimers related to market conduct and investment advice.

Legal Disclaimer

• This document is non-independent research and not investment research under MiFID.
• It is a marketing communication and not intended for retail investors.
• No guarantees or warranties are made regarding the accuracy or completeness of the information.
• BNP Paribas may have financial interests in the mentioned entities and may engage in transactions that conflict with the views expressed.
• The document is subject to change and is not a prospectus or public offering.

Conclusion

The 2018 Brazilian election is expected to be a pivotal moment, influenced by the improving economy, public sentiment against corruption, and the potential for a shift in political power from the left to the centre-right. While the campaign may be volatile, the base case scenario assumes a constructive outcome, with continuity in economic policies and a likely convergence of candidates towards the centre.