Beyond Lula and Bolsonaro

Good afternoon from New Economy Brief.

This week we dig into the economics behind the Brazilian election and explore why economic recovery has not ended political polarisation in Brazil.

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What’s happening 

Brazil's presidential election has entered a decisive second round. At first glance, the contest looks familiar. President Luiz Inácio Lula da Silva leads a centre-left coalition seeking another term, while Senator Flávio Bolsonaro has emerged as the principal representative of the conservative movement associated with his father, former president Jair Bolsonaro.

The bigger picture. The first-round results delivered one of the closest contests since democratisation, with Flávio Bolsonaro securing 47% of valid votes against Luiz Inácio Lula da Silva's 45%, a margin of just 2.2 million votes. The result was striking not merely because of its closeness, but because it underscored the continuing strength of Bolsonarismo despite years of political upheaval, Jair Bolsonaro’s legal battles, and an economy that has performed better than many observers expected.

For international observers, the immediate question is whether Lula can engineer a historic comeback. Since Brazil's return to democracy in 1989, no candidate who finished first in the opening round has gone on to lose the presidency. Yet focusing exclusively on electoral arithmetic risks missing the more important story: why a far-right political movement remains so competitive despite declining unemployment, reductions in poverty, and a period of relative economic stability under a progressive government.

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Looking behind the stats

 The answer lies in a growing disconnect between macroeconomic performance and lived experience. Since Lula returned to office in 2023, Brazil has, by most conventional measures, been moving in the opposite direction from what these  electoral dynamics might suggest. Lula has presided over the lowest unemployment rate since 2012, alongside reductions in poverty and extreme poverty. His government has also strengthened social programmes - relaunching and expanding the Bolsa Família income support scheme, reactivating housing and healthcare initiatives that Bolsonaro had neglected or cancelled and launching new projects like Pé-de-Meia aimed at encouraging students from poorer backgrounds to finish school. Brazil has also regained international visibility as an influential actor within BRICS and the wider Global South. It has positioned itself as a leading voice on climate change and sustainable development, exemplified by its 2025 BRICS presidency and leadership ahead of COP30. Economic growth has consistently outperformed expectations, while the government has sought to combine social inclusion with fiscal discipline.

However, despite improving macroeconomic indicators, many Brazilians still feel insecure in daily life. Household debt remains high, employment is increasingly fragmented - precarious and informal, platform work has expanded, and access to housing, public services and economic opportunities remains deeply unequal. For many households, economic growth has not translated into a stronger sense of stability, security or confidence about the future.

The Bolsonaro brand. This helps explain why narratives centred on order, moral conservatism, anti-establishment sentiment and public security still resonate with large segments of the electorate. Commentators have often sought to explain Flávio Bolsonaro's competitiveness through the enduring strength of the Bolsonaro brand, the salience of public security concerns, the persistence of anti-Workers’ Party sentiment, and cultural wars. 

These factors are undoubtedly important. Jair Bolsonaro remains the central figure of the Brazilian right, public concerns about crime and violence continue to shape electoral preferences, and political polarisation is still a defining feature of Brazilian politics. Yet Bolsonarismo’s appeal cannot be explained solely by electoral strategy, disinformation, or the personal influence of the Bolsonaro family. Its durability reflects deeper transformations in Brazilian society: the erosion of stable forms of employment, growing economic insecurity, fragmented social identities, and declining confidence in institutions' ability to deliver security, mobility and opportunity. In this context, Bolsonarismo has evolved beyond a political movement centred on a single leader. It serves as a vehicle through which broader social anxieties and frustrations are expressed, giving it a resilience that extends well beyond Jair Bolsonaro's individual political fortunes.

The first-round results provide further evidence of this. The significance of Flávio Bolsonaro's performance is not simply that he advanced to the runoff; it is that Bolsonarismo demonstrated its ability to survive beyond its original leader. Many analysts expected the movement to weaken once separated from Jair Bolsonaro's direct political presence. Instead, the first round suggests that it has become institutionalised within Brazilian society, drawing support from a broad coalition that includes agribusiness interests, evangelical networks, sectors of the middle classes, security forces and voters dissatisfied with established political institutions. 

Polarisation and disengagement. The geographic distribution of votes reinforces this interpretation. Lula maintained dominance across the northeast while Bolsonaro performed strongly across much of the south, southeast and centre-west, revealing the persistence of long-term regional, social and economic divides. What emerges is not merely electoral competition between two candidates, but the coexistence of distinct political projects rooted in different experiences of development, state intervention and national identity. 

Equally revealing was the level of political disengagement. More than 21% of eligible voters abstained in the first round, the highest rate since 1998. This suggests that people are expressing dissatisfaction not only by supporting competing political projects but also by withdrawing from electoral participation itself. The challenge facing Brazilian democracy is therefore broader than defeating a political opponent. It involves rebuilding trust in institutions and demonstrating that democratic politics can meaningfully improve people's lives. 

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Brazil and beyond 

For scholars of political economy, these dynamics are hardly unique to Brazil. Across advanced and developing economies alike, governments face a common problem: economic growth and low unemployment no longer automatically generate social and political legitimacy. Voters increasingly judge political systems not by aggregate indicators but by whether they deliver security, dignity and a credible sense of future progress.

In this respect, Brazil offers an important lesson. The endurance of Bolsonarismo reveals the limits of relying on economic performance alone to stabilise democratic politics. Electoral competition is taking place against the backdrop of deeper frustrations generated by decades of structural transformation, deindustrialisation, inequality and economic insecurity.

The significance of Brazil's runoff election therefore extends well beyond who occupies the Palácio do Planalto. Whether Lula secures re-election or Bolsonaro's movement wins a new mandate, the first-round result has already highlighted a challenge confronting democracies worldwide: how to transform economic recovery into a broadly shared experience of security, belonging and hope. Until that challenge is addressed, the political conditions that gave rise to Bolsonarismo are likely to endure.