Insights by Luiz Fabbriani (Strategic & Performance Advisory for Infrastructure)
Brazil Macro & Infrastructure Briefing, September 2026
Brazil at a Knife's Edge
A dead-heat election, a three-front trade war, and what it means for capital.
A race decided at the margin
Brazil goes to the polls on October 4 with a deeply polarized electorate and no clear frontrunner. Over the summer, President Lula's lead over Senator Flávio Bolsonaro disappeared. In late July, AtlasIntel had Lula 9.1 points ahead in the first round and 6.3 points ahead in a runoff. By late September, the Quaest poll showed Lula at 37% and Flávio at 33% in the first round, with Flávio ahead 42% to 41% in a runoff, a technical tie within the margin of error.
The more telling number is rejection. According to AtlasIntel, 52% of voters say they would never vote for Lula and 50.2% say the same of Flávio. This is an election to be won by whoever is least rejected, not by whoever inspires most. The centrist field of Augusto Cury, Ronaldo Caiado, Renan Santos and Romeu Zema is unlikely to break through, but its voters, roughly one in ten, could well decide the runoff.
Congress: rightward, fragmented, and pivotal
For investors, the legislature may matter as much as the presidency. Two-thirds of the 81 Senate seats are up for election, and projections point to a more conservative, more fragmented chamber. The PL is expected to grow from 15 to at least 20 senators and the PT from nine to 11 or 12, while the traditional centrist bloc shrinks. In the Lower House, the center remains the kingmaker.
Investor read
No winner will have a working majority of its own. Expect negotiated, incremental policymaking, and more friction between Congress and the Supreme Court, which is a source of institutional noise but not of systemic risk.
A three-front trade squeeze
Brazil faces something unusual: barriers from all three of its largest markets at once.
- United States: an additional tariff on roughly 3,000 Brazilian products has been in effect since July 22.
- China: a safeguard quota on Brazilian beef, with a 55% surcharge on volumes above it.
- European Union: a sanitary ban on Brazilian meat, fish and honey since September 3.
The counterweight is the EU–Mercosur agreement, provisionally in force since May 1, which is now Brazil's main tool for diversifying trade. Trade policy has moved from the margins of the campaign to the center, with direct consequences for agribusiness and industrial exporters.
Macro: guardrails hold, fiscal credibility is the swing factor
The Selic rate stands at 13.75%, among the highest real rates in the world. Encouragingly, no major candidate proposes abandoning the floating exchange rate or formally curbing central bank autonomy. The risk of a macro rupture is low. The real variable is the pace and design of fiscal adjustment, and with it Brazil's cost of capital through 2030.
Scenarios for October 25
Continuity (Lula)
Policy stays predictable and trade diversification continues. Expect a persistent fiscal risk premium and a more adversarial Senate.
Change (Flávio)
A likely early market rally on the fiscal and privatization agenda. Watch for heightened institutional friction and exposure in the China relationship.
Centrist upset
The least likely outcome, with high first-year uncertainty while a coalition is assembled.
Where the opportunity lies
Beyond the electoral noise, several structural agendas are largely immune to who wins.
- Sanitation: the 2033 universalization target under the Sanitation Legal Framework keeps concession and PPP pipelines active. The emphasis is shifting from auctioning assets to delivering results.
- Tax reform: the transition to IBS/CBS will trigger tariff reviews and economic-financial rebalancing across long-term contracts.
- Energy and digital infrastructure: transmission, water security and data centers are driven by global AI and energy demand more than by domestic politics.
In a high-rate environment, capital will reward well-structured projects with auditable performance data and strong governance.
What to watch
- Poll trajectory, rather than any single survey, into October 4.
- How centrist votes transfer ahead of the runoff.
- Any breakthrough in US–Brazil tariff talks.
- Close state Senate races, which will determine the next government's ability to govern.
- The first signals from the incoming economic team.
Bottom line
Expect elevated FX and rate volatility between October 4 and 25, and deferred financial closes until the economic team is known. Beyond the noise, Brazil's infrastructure investment case rests on long-term demand that no election can reverse. Investors who position now, selectively and with rigorous risk structuring, may find the post-election window among the most attractive in years.
Luiz Fernando Fabbriani
Verdius Infraestratégia
Sources: Quaest (Sep 17–20, 2026), AtlasIntel (Jul and Sep 2026), Senate and Chamber of Deputies public data, and press coverage of trade measures. This briefing is for informational purposes only and does not constitute investment advice. Poll figures reflect conditions at the time of writing.
