Brazil's Lula recoups approval amid sovereignty push, Bolsonaro trial

A recent Datafolha poll indicates Brazilian President Luiz Inacio Lula da Silva’s government approval rating has risen to a year-high of 33%, with disapproval falling to 38%. This improvement, coinciding with Lula's sovereignty campaign and legal challenges faced by his rival Jair Bolsonaro, suggests a positive trend for his administration. The uptick could signal increased political stability and a stronger mandate for policy initiatives after a challenging start to the year.

Analysis

Recent polling data indicates a notable improvement in the political standing of Brazilian President Luiz Inacio Lula da Silva's administration. A Datafolha poll shows government approval rising four points to a 2024 high of 33%, while disapproval has concurrently fallen to 38%. This positive shift is attributed to two primary factors: a popular sovereignty campaign against U.S. tariffs and the legal incapacitation of chief political rival Jair Bolsonaro, who is now ineligible for office. The trend of recovering public support, also noted in a prior Genial/Quaest survey, suggests increasing political stability and a potentially stronger mandate for the administration's policy agenda after a challenging start to the year. While these developments are positive for sentiment, the low market impact score of 0.15 suggests this single poll is an incremental data point rather than a major market catalyst, and a plurality of respondents still disapprove of the government.

Key Decisions for Investors

• Investors may consider this a reduction in Brazil's political risk premium, warranting a review of underweight positions in Brazilian assets, as increased political stability could foster a more predictable policy environment.
• Monitor Brazil-U.S. trade relations closely, as the article links Lula's popularity to a campaign against U.S. tariffs, indicating that assertive trade policy could become a more prominent feature with potential impacts on specific sectors.
• Given that disapproval ratings still exceed approval, treat this positive data as an early indicator and await further confirmation from economic data and subsequent polls before making significant allocation changes to Brazil-focused portfolios.