SAO PAULO – Business leaders and financial markets in Latin America’s largest economy are shaking off their misgivings to coalesce around the candidacy of poll leader Jair Bolsonaro, a retired army captain who has repeatedly said he doesn’t understand the economy.
For many Brazilians, Bolsonaro’s candidacy in Sunday’s vote has long provoked fears because of his penchant for waxing nostalgic about the country’s 1964-1985 dictatorship, along with his steady stream of derogatory comments about women, blacks, indigenous peoples and gays. For their part, industry leaders worried about what they saw a big-government, populist streak in past statements and his voting record.
The growing decision by the business community to essentially hold its nose is being driven by factors ranging from Bolsonaro’s decision to name an esteemed banker as head of his economic team to fear about a return of the left-leaning policies of the Workers’ Party.
The darling of the markets, former Sao Paulo Gov. Geraldo Alckmin, has largely faded from contention in recent weeks despite major party support and more free air time than any other candidate.
Bolsonaro leads polls in the crowded 13-candidate field followed by Workers’ Party candidate Fernando Haddad, who is likely to meet him in an Oct. 28 runoff.
“For the markets, Bolsonaro is not a dream candidate, but he represents less risk than Haddad,” said Gilberto Braga, a finance professor at the business-oriented Ibmec university in Rio de Janeiro.
Some are skeptical that Bolsonaro truly represents less risk for the economy, or other aspects of society.
Besides divisive comments, some of Bolsonaro’s proposals, such as cracking down on crime by giving freer rein to already-violent police forces, are sending shivers through many communities.
He has promised to fill his cabinet with current and former generals, raising the spectre of a de facto military government. Historically, leaders of such governments in many countries have increased state control of the economy, not reduced it.
“The one person who is actually most likely to turn Brazil into Venezuela is Bolsonaro,” said Monica de Bolle, director of Latin American Studies at Johns Hopkins University.
During his 27 years in Congress, Bolsonaro, who represents Rio de Janeiro, accomplished very little: Only two bills he proposed were made into law. He also repeatedly voted against privatizations and other economic policies he now says he supports.
Still, in recent months, stock markets have surged and the Brazilian real has gained strength against the U.S. dollar each time Bolsonaro’s candidacy has appeared to gain strength. Several polls show Bolsonaro gaining more than 10 points since Sept. 6, when he was stabbed and hospitalized while campaigning.
He now commands 35 per cent of voter intentions compared to 22 per cent for Haddad, according to a Datafolha poll published Thursday. The poll interviewed 10,930 voters on Wednesday and Thursday and had a 2 percentage point margin of error.
Bolsonaro, who has promised to cut taxes and reduce the bureaucracy, has steadily gained endorsements of businessmen and industrial associations.
Helping push Bolsonaro forward was the naming of Paulo Guedes, a University of Chicago-trained economist, as his lead economic adviser.
Guedes is a banker and a major stockholder at company Br Investments, which owns several companies in retail. He has advocated privatizing of all Brazil’s state-owned companies, including oil giant Petrobras.
But while Bolsonaro has frequently deferred to Guedes, he has also contradicted his economic adviser at times, creating confusion. In fact, Guedes has largely disappeared from the campaign since cancelling two events on Sept. 21.
A few days earlier, Guedes floated the idea of reinstating an unpopular bank transfer tax. From his hospital bed, Bolsonaro tweeted that his team had ruled out new taxes.
“He doesn’t have political experience,” Bolsonaro told the daily Folha de S.Paulo, referring to Guedes. “He gives one-hour-long lectures, says one thing in a few seconds and the press goes after him.”
Bolsonaro is also getting a large boost from Brazilians who don’t want a return to the Workers’ Party, which held the presidency from 2003 to 2016. Many blame the party for largest corruption scandals in the nation’s history, the so called “Carwash” investigation into billions of dollars in bribes to politicians and other officials by way of kickbacks from construction contracts.
Many economists also say the party’s heavy-spending policies, particularly in recent years under ex-President Dilma Rousseff, contributed to the country’s worst economic crisis in decades.
Rousseff, who succeeded President Luiz Inacio Lula da Silva in 2011, was impeached and removed from office in 2016 for illegally managing the federal budget. Rousseff denied wrongdoing and said was the victim of a “coup.”
Da Silva, who is jailed, had been leading polls before being barred from running due to a 12-year sentence for corruption, which he is appealing.
At every step, Bolsonaro has taken advantage of the turmoil, presenting himself as a candidate ready to drain the swamp of corrupt politicians.
For his part, Haddad has promised to cut income taxes for workers making less than $1,216 a month and raise taxes on the rich for offset a drop in revenue. However, he has not made clear how he would deal with an expected deficit of $39 billion in 2019.
“Whoever wins, the day after the election will be filled with doubts for us,” said Andre Perfeito, chief economist of broker Spinelli.
Peter Prengaman reported from Rio de Janeiro.