Chance of coup in Brazil is remote, but Bolsonaro can threaten with chaos, says Gavekal

In less than three months, Brazil goes to the polls and a coup is unlikely to take place in the country, but President Jair Bolsonaro (PL) could threaten to bring about “chaos”, warns consultancy Gavekal in a report published this Friday. fair (8).

“With a viable third-way candidate still to emerge, it looks like it will be a two-horse race between far-right President Jair Bolsonaro and left-wing former President Luiz Inácio Lula da Silva,” says the statement. report.

The article was highlighted early this Friday afternoon by the Brazil Journal.

In the text, analysts Tom Miller and Udith Sikand add that, if Lula wins, many Brazilians fear that Bolsonaro will refuse to admit defeat.

The authors go on to report that, instead of recognizing a virtual victory for Lula and inspired by Donald Trump, the former president of the United States, Bolsonaro can orchestrate an insurrection similar to the one that occurred on Capitol Hill, with Trump’s defeat at the polls.

“Brazil observers in Washington even speak of a military coup, potentially plunging South America’s largest economy back into military dictatorship after nearly 40 years of democratic rule,” the text continues.

Most analysts say they believe the election is Lula’s, although Faria Lima’s money still hasn’t ruled out Bolsonaro, the authors say. “If Lula wins in the first round, Bolsonaro will fight to mobilize opposition support.”

“After two weeks in Brazil, we believe that a coup is highly unlikely. While there is a good chance that Bolsonaro will contest the election result, especially if there is no winner in the first round, he does not have the support of high-ranking military personnel.” follow the article.

Analysts conclude that President Bolsonaro is most likely to use the climate of threats to democracy to bargain for his freedom next year if he leaves the presidency.

“A more likely scenario is that Bolsonaro uses the threat of chaos to broker a deal to secure his freedom. Several members of his family have been investigated for corruption, and he wants to avoid suffering the same fate as Lula, who was arrested on corruption charges. in 2018.”

The authors also point out that Brazil may have good opportunities for investors, after the turmoil of the elections.

“Brazil’s growth trajectory ebbs and flows with commodity prices, regardless of who is in power. In the mid-2000s, a rise in prices allowed Lula to pursue redistributive policies that made him ‘the most popular politician in the world’ . When prices fell in 2014, these expansionary policies had to be undone.”

Gavekal is a financial services company based in Hong Kong. They provide two main services: Gavekal Research (with daily commentary on global markets and macroeconomics) and Gavekal Dragonomics (analysis on China, twice a week).

Tom Miller, one of the authors of the text, is a senior analyst for Asia, specializing in the Chinese and Indian markets. The second author, Udith Sikand, is a senior emerging markets analyst.

The world seems to turn its eyes to Brazil as the October election approaches. With former President Lula leading the way in polls and the Bolsonaro administration trying to reverse its disapproval through measures such as increasing Auxílio Brasil and lowering fuel prices, the economic climate through October looks set to be tainted by uncertainty.

“The government is dynamiting pillars of the fiscal regime”, evaluated Mario Felisberto, chief investment officer at Santander Asset Management, in an interview with Sheet this week. The manager of the Spanish bank with around R$300 billion in assets in the local market.

The president has also made increasingly constant attacks on electronic voting machines, to undermine the credibility of the electoral process.

In his weekly live last Thursday (7), Bolsonaro said that he “distrusts” the work of the TSE (Superior Electoral Court).

He stated that he will invite ambassadors from all countries to participate, next week, in a meeting where he will talk about “how is the Brazilian electoral system”. He also said he will bring “documents” relating to the 2014, 2018 and 2020 elections.

Bolsonaro has said a few times that he would have won the 2018 elections in the first round and that the election was rigged, so he had to run in the second round.