Brazil: the next steps after Lula's victory

Luiz Inácio Lula da Silva, the candidate from the left-wing Workers’ Party, won the final round of Brazil’s presidential election on October 27th with more than 60% of the votes.

Fernando Luque 29 October, 2002 | 4:33PM
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The markets had already discounted this victory with the MSCI Brazil index gaining an important 13%, in euro terms, during the week before the election, compared with a timid rise of 0.6% for the MSCI Emerging Markets.

Even if the uncertainty of the election has passed the big question now is how Lula will tackle the country’s problems. On one hand there are the illusions of the millions of people who voted for him - more than 100 million Brazilians are living on less than two dollars per day - and on the other hand there is the financial community and, in particular, the International Monetary Fund (IMF).

Kenneth Rogoff, the chief economist of the IMF, has already insisted on the need for a strong economic team to reduce Brazil’s large public debt burden - now around $25

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Fernando Luque

Fernando Luque  is Senior Financial Editor at Morningstar Spain