April 5 (Bloomberg) -- Brazilian President Dilma Rousseff’s re-election bid lost support in a poll conducted by Datafolha as faster inflation and slower growth damaged her government’s popularity. She still had more than the level of support a candidate will need to win the first round this year.
Rousseff’s support fell to 38 percent from 44 percent in February in a poll that pitched her against opposition candidates Aecio Neves and Eduardo Campos. Support for Senator Neves, from the Brazilian Social Democracy Party, was unchanged at 16 percent. Former governor of Pernambuco state Campos garnered 10 percent, little changed from February, according to the April 2-3 survey of 2,637 people. The poll has a margin of error of plus or minus 2 percentage points.
Rousseff, who is expected to run for a second term in October, has been struggling to contain consumer prices while reviving economic growth that slowed to an average 2 percent during her first three years in office. That is the slowest pace for a Brazilian president since Fernando Collor, who resigned in 1992 under corruption allegations.
“A lot people in the market would like to see her losing the election,” Andre Perfeito, chief economist at Gradual Investimentos in Sao Paulo, said by phone. “They may see it as negative she is still winning, while others may interpret today’s drop to mean she will have a hard time in October elections. But it still is early.”
The benchmark index of Brazilian stocks surged 3.5 percent on March 27, when a poll conducted by CNI-Ibope showed that Rousseff’s approval rating fell for the first time since protests pushed her popularity to a record low.
After more than 1 million took to the streets to demonstrate in June, her government approval rating fell to 30 percent from 65 percent in March, according to Datafolha. It recovered in the next three polls to 41 percent in both November and February.
Her government approval rating fell to 36 percent in April as an increasing number of respondents expect above-target inflation to accelerate, according to the Datafolha poll posted today in the online edition of Folha de S. Paulo newspaper. That is the lowest approval since August.
To win in the first round in October a candidate needs to have more than 50 percent of the vote or more votes than all other candidates added together. If Rousseff were to lose in October, the nation’s financial assets could rally as her defeat opens the door to policy changes, Jorge Mariscal, the chief investment officer for emerging markets at UBS Wealth Management, said April 2 in a Rio de Janeiro interview.
Her administration adopted measures to fuel growth that have sparked inflation and widened the fiscal deficit. Standard & Poor’s lowered the nation’s credit rating on March 24 by one level to BBB-, the lowest investment grade, saying sluggish economic growth and an expansionary fiscal policy are fueling an increase in debt.
Brazil’s next government will have to reduce public spending by measures including laying off workers to avoid a further deterioration of the government’s fiscal position, Mariscal said.
Economists in a March 28 survey by the central bank increased their 2014 inflation forecast to 6.3 percent, near the upper limit of the target range of 2.5 percent to 6.5 percent. The worst drought in more than half a century pushed food and beverage prices up 1.11 percent in the month through mid-March, more than twice the rate in February.
“Without a shadow of a doubt, whenever people’s income changes they demand better services,” Rousseff said in a speech on April 2. “That is not only natural, but a part of understanding reality.”
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