Rousseff Poll Lead Narrows as Brazil Second Round Looms

Brazilian President Dilma Rousseff’s lead over her main contender in the October election narrowed, indicating she may not have enough support to win in a first round vote.

Rousseff’s support was little changed at 37 percent this month from 38 percent in April, according to a Datafolha poll published today on Folha de Sao Paulo’s website. Senator Aecio Neves of the Social Democracy Party had 20 percent, up from 16 percent last month. The sum of all of Rousseff’s ten challengers exceeds her support by one percentage point in the May 7-8 survey of 2,844 people. The poll had a margin of error of 2 percentage points.

To win in the first round a candidate needs to have more than 50 percent support or more votes than all other candidates combined. Former Pernambuco state Governor Eduardo Campos trailed in third place with 11 percent, from 10 percent in April.

“The conclusion is that the election is undecided,” said Roberto Padovani, chief economist at Votorantim Ctvm Ltda, said by telephone. “Until a few days ago it looked like Dilma would win easily in a first round, now it’ll be a competitive election.”

Future rates fell after consumer prices in April rose less than economists forecast. Swap rates on the contract due in January 2017, the most traded in Sao Paulo today, fell 11 basis points, or 0.11 percentage point, to 12.09 at 11:25 a.m. local time. The real fell 0.23 percent to 2.2201 against the U.S. dollar.

Confirming a Trend

Today’s survey confirms two surveys by different pollsters released over the past fortnight that showed opposition candidates gaining on her. It also showed that Rousseff’s increased media exposure has managed to slow her decline in the polls, said Christopher Garman, director for emerging markets at Eurasia Group consulting firm.

“This will be a close election but today’s poll shows she’s stopped the hemorrhaging,” Garman said by phone from Washington.

Her government’s approval rating was little changed at 35 percent from 36 percent in April.

In response to growing discontent with rising living costs and slow growth, Rousseff on May 1 pledged to cut income taxes, continue with minimum wage increases and boost cash transfers to the poor by 1.7 billion reais ($770 million) this year.

Ruling Party

Campaign ads by her ruling Workers’ Party in the first week of this month may also have helped stem her approval, Garman said.

A May 4 Sensus poll showed Rousseff’s lead over Neves narrowing to 11.3 percentage points and with too few votes to guarantee victory in the first round. That survey, published in IstoE magazine, had Rousseff with 35 percent voter support and Campos with 11 percent.

The Rousseff campaign expects she will fall short of the votes for a first-round win, a government official with knowledge of the matter said prior to today’s poll.

Market Recovery

Rousseff’s drop in approval since late March has fueled a recovery in the country’s equity market and in its creditworthiness. It has also sparked renewed calls from within the governing coalition, including 20 lawmakers from the Party of the Republic, for former President Luiz Inacio Lula da Silva, 68, to run in Rousseff’s place. The Workers’ Party on May 3 nominated her as presidential candidate to be confirmed at a convention in June. Lula said he was firmly behind Rousseff, 66, and would be campaigning for her.

During her first three years in office, economic growth has decelerated to the slowest average pace for a Brazilian president since Fernando Collor, who resigned in 1992 on corruption allegations. Her policies to revive the economy stoked inflation that has a 40 percent chance of breaching the 6.5 percent upper limit of policy makers’ target range, according to the central bank.

Brazil’s economy will expand 1.63 percent this year from 2.3 percent in 2013 as inflation accelerates to 6.5 percent, according to the median estimate of about 100 analysts polled on May 2 by the central bank.

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