“We Can’t Be Part Of A Lost Generation”: Bolsonaro Wins Four Key Party Endorsements Ahead Of Brazil Runoff

In a postmortem published Wednesday on Sunday’s first-round Brazilian presidential election, Alberto Ramos, Goldman Sachs’ chief Latin American economist, described a “conservative wave” that swept the country, culminating in right-wing Senator Flávio Bolsonaro’s win over unhinged socialist President Luiz Inácio Lula da Silva.

Bolsonaro’s momentum continued mid-week after he secured endorsements from four center-right parties, strengthening his coalition ahead of the October 25 runoff election against Lula. 

Bloomberg reports that Uniao Brasil, Progressistas, Republicanos and Novo backed Bolsonaro on Wednseday, one day after former rival Ronaldo Caiado backed him. 

“We can’t be part of a lost generation,” Sao Paulo Governor Tarcísio de Freitas told Bolsonaro at a Republicanos event late Wednesday.

Freitas added, ”We have to deliver on the work that your father started.”

Freitas is describing the nation-killing socialist policies of Lula and how a once-in-a-generation conservative sweep has shifted South America from left-wing to right-wing after years of economic despair under socialist rule. 

If Bolsonaro wins the runoff, it would cement the South American shift from left to right, with the continent’s largest GDP joining it. 

Goldman’s Ramos commented on the upcoming runoff:

Whether Senator Bolsonaro or President Lula wins, the next president will need to build a multiparty coalition. 

If elected, Senator Bolsonaro would likely need centrist support to form a governing coalition, but he would begin with a strong right- and center-right base (PL, PP, União Brasil, Republicanos, and Novo) for passing ordinary legislation. 

By contrast, a runoff victory by President Lula would likely leave his administration facing even greater challenges in Congress because of the larger conservative opposition bloc and the fact that his political capital will be limited because he cannot seek reelection in 2030.

Separately, David Beker, Bank of America’s chief Brazil economist, commented on the economic challenges for Brazil that lie just ahead, saying:

For markets, the key challenge following Brazil’s elections will be ensuring debt sustainability. Brazil’s gross debt-to-GDP ratio is set to increase by more than 10 percentage points during President Lula’s third term, making fiscal reform the top priority for the next administration to foster a more sustainable macroeconomic environment. 

We currently forecast debt-to-GDP at 83.0% by YE26, rising to 90.4% by year-end 2028. Stabilizing the debt trajectory would require a primary surplus of roughly 3.0% of GDP, implying an additional fiscal adjustment of approximately 3.5% of GDP, as we project the public sector balance to deteriorate to a deficit of 0.6% of GDP by YE28.

Meanwhile, the Brazilian real strengthened and the benchmark Bovespa stock index rallied sharply earlier this week, signaling the market has had enough with socialists and welcomes Bolsonaro, who would pursue greater fiscal discipline. The moves come as his economic team prepares to outline a plan to curb out-of-control spending under Lula’s administration.

UBS hosted Ideia Big Data on Tuesday and came to the consultancy firm assigned Bolsonaro an 85% probability of victory (read report).