Rousseff Gains Support in Brazil Poll for First Time in 2014

Brazilian leader Dilma Rousseff gained support for her re-election bid for the first time this year in a Datafolha poll as the World Cup shifts attention away from slower growth and faster inflation. (BZPIIPCY) State-run companies fell.

Rousseff’s support among voters in the Oct. 5 election rose to 38 percent from 34 percent in June, according to a Datafolha poll published yesterday on Folha de Sao Paulo’s website. Aecio Neves of the Brazilian Social Democracy Party, or PSDB, had 20 percent, up from 19 percent. The July 1-2 survey of 2,857 people has a margin of error of two percentage points.

Protests that last year torpedoed Rousseff’s popularity have largely vanished as Brazilians gather to watch the World Cup that is being hosted in the country for the first time since 1950. Discontent with delays in infrastructure projects and cost overruns in the run-up to the games, exacerbated by bus, subway and police strikes, has given way to excitement over a tourney that has already seen more goals scored than in the 2010 cup.

“The World Cup has produced a news blackout, Neymar replaced inflation -- that benefits Dilma,” Jose Luciano Dias, directing partner of consulting firm CAC Consultoria Politica, said by phone in Brasilia, referring to the Brazilian soccer star taking the media limelight. “The real test is when the games are over.”

Brazilian Pride

The sentiment of Brazilians toward the cup has improved, with 60 percent being proud of the way it’s being carried out, up from 45 percent, the Datafolha poll showed.

Shares in state-run electricity company Centrais Eletricas Brasileiras SA (ELET6) fell as much as 1.8 percent to to 10.09 reais in Sao Paulo. Petroleo Brasileiro SA (PETR4) dropped as much as 1.6 percent before rising and Banco do Brasil fell as much as 1.7 percent.

Eletrobras “was badly hurt by the government policies regarding renewal of concessions, so now investors think that a new administration could be a positive for them,” Felipe Rocha, an analyst at Guide Investimentos brokerage, said by phone from Curitiba, Brazil.

Rousseff’s support, which was 44 percent in February, started eroding in April amid accelerating inflation and the slowest economic growth for a president in more than two decades.

Stock Rally

The drop in her support earlier this year fueled a rally in equities as traders speculated the opposition could regain power after 12 years and adopt less interventionist policies.

On April 7, the Ibovespa rose the most among the world’s major benchmarks as oil producer Petrobras led a rally in state-controlled companies after a Datafolha poll showed reduced support for Rousseff.

Eduardo Campos of the Brazilian Socialist Party rose to 9 percent from 7 percent, while all of Rousseff’s challengers together garnered 38 percent, according to the Datafolha poll published yesterday. To avoid a run-off vote on Oct. 26, a candidate needs to have more votes than all other candidates combined.

Rousseff would garner 46 percent of votes in a simulated second round, unchanged from last month. Neves would tally 39 percent, from 38 percent.

The poll showed a second round was increasingly likely and that the gap between Rousseff and Neves was narrowing, the PSDB said in an e-mailed statement. Rousseff’s press office didn’t immediately respond to an e-mail requesting comment.

Street Protests

While more than 1 million people took to the streets last year to protest against inflation and misspending of public funds, demonstrations during the World Cup haven’t exceeded 3,000 people.

Sepp Blatter, head of soccer governing body FIFA, who in January complained about delays in getting the 12 World Cup stadiums ready, said more people are flocking to the FIFA-sponsored Fan Fest viewing areas than joining protests.

The longer Brazil stays in the tourney, the longer the feel-good element will persist and help Rousseff, Christopher Garman, director of emerging markets and Latin America at Eurasia Group consulting firm in Washington, said in an interview before the Datafolha poll was published. Worsening economic indicators and TV campaign ads that will boost name recognition of opposition candidates will also weigh into the equation, said Garman. He gives Rousseff a 70 percent chance of winning the presidential race.

Economic growth is forecast to slow to 1.1 percent this year, according to the latest central bank survey of economists, from 2.5 percent last year. Inflation in May accelerated to 6.37 percent, near the 6.5 percent upper limit of the target range and the fastest rate in 11 months.

To contact the reporter on this story: Raymond Colitt in Brasilia Newsroom at rcolitt@bloomberg.net

To contact the editors responsible for this story: Andre Soliani at asoliani@bloomberg.net Randall Woods

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