Lula secures a fourth term and accelerates Brazil’s regulatory agenda

By Thyago Mathias, Vice-President of Corporate Affairs for Latin America SEC Newgate Brazil

Lula’s fourth mandate begins with greater political authority but a more conservative Congress and uncertain market reaction. The months ahead will test his ability to build congressional support and maintain fiscal credibility, while businesses face more immediate decisions around digital regulation, shorter working hours and betting restrictions.Thyago Mathias, vice-president of Corporate Affairs for Latin America, examines what comes next and what it means for business.

How Lula turned the election around

President Luiz Inácio Lula da Silva won Brazil’s 25 October run-off with nearly 52% of valid votes against Senator Flávio Bolsonaro’s 48%, securing an unprecedented fourth mandate. Having trailed in the first round, Lula achieved the first presidential reversal of this kind since direct elections resumed in 1989. 

Lula’s comeback was built through a mobilisation that moved from screens to streets and ultimately into polling stations. Marches, neighbourhood campaigning and volunteer networks gathered momentum after the first round, with demonstrations reported across at least 24 state capitals. The campaign focused on converting support into turnout, including mobilising previous non-voters and helping people overcome practical obstacles to voting. 

Representative André Janones’s “Exército do Lula”, a WhatsApp network reaching almost 11 million followers, connected digital campaigning with this mobilisation on the ground. National abstention fell from 21% to 19%, bringing approximately three million additional voters to the polls. The campaign demonstrated the growing importance of direct digital communication to political mobilisation, even as Lula challenged the influence of the platforms carrying it.

At 80, Lula is entering what should be his final presidential term, while Flávio’s defeat opens competition within the right. Re-elected São Paulo Governor Tarcísio de Freitas could emerge as a future coalition-builder, while digitally influential figures are likely to shape succession on both sides. The familiar Lula-Bolsonaro contest may be ending, but Brazil’s political polarisation is unlikely to disappear with it.

International recognition and relationships with Washington

After the result, Bolsonaro announced that he would seek annulment, citing the Supreme Court’s extension of voting hours following transport disruptions. However, institutional support for the electoral process makes a judicial reversal highly unlikely, with SEC Newgate assessing the probability at below 1%.

Washington’s response is a more consequential external uncertainty. Eduardo Bolsonaro, Flávio’s brother, remains in the US under a Brazilian arrest warrant and has publicly sought US pressure on Brazilian authorities, while the appointment of ambassador-designate Daniel Perez remains unresolved. The 3 November US midterms could alter political support, oversight and diplomatic appointments, although foreign non-recognition would not itself invalidate Brazil’s election.

Elsewhere, Lula has received broad regional recognition, limiting Bolsonaro’s diplomatic room. China is unlikely to resist the result, while European partners are similarly unlikely to question it. With China Brazil’s largest trading partner, continuity in relations with Beijing, Europe and Mercosur will remain commercially important.

Market repricing and the fiscal test

The result challenges market expectations of a Bolsonaro victory. Our near-term scenario anticipates real depreciation, equity selling and possible foreign portfolio outflows as investors unwind expectations of a more liberal economic programme.

The durability of that adjustment depends on fiscal policy. Campaign commitments will increase pressure on the 2027 budget, potentially prompting income-tax changes or withdrawal of tax concessions, whilst financing needs could keep borrowing costs high. Before the run-off, Brazil’s Central Bank Focus survey put median year-end Selic expectations at 13.25% for 2026 and 12% for 2027. 

Opportunities will be selective. Low-income housing developers, exporters earning foreign currency, and companies with limited debt may be relatively well positioned, but all remain exposed to wider fiscal, trade and interest-rate risks. Through 2027, balance-sheet resilience and reliable revenues may matter more than a broad pro-government sector classification. Fiscal execution will determine whether an initial sell-off creates attractive valuations or reflects persistently weaker earnings expectations.

What this means for businesses

For technology companies, Lula’s commitment to platform regulation raises the prospect of stronger requirements on algorithmic transparency, political advertising, content moderation and accountability for harmful or unlawful material, with AI also drawing scrutiny. Platforms should prepare for requests for information, hearings and closer examination of their local governance and enforcement practices. Advertisers and technology suppliers may face consequential changes to contracts, campaign approval and compliance processes. Early engagement with policymakers will be important both before February and as the government develops its wider digital agenda.

Labour policy has already moved beyond campaign promises. Constitutional Amendment 141 replaces the six-days-on, one-day-off pattern with two paid rest days. The maximum working week falls from 44 to 42 hours after 60 days, then to 40 hours twelve months later, without salary reductions. Retail, hospitality, healthcare and logistics employers should reassess staffing, overtime, collective agreements and productivity before implementation.  

Betting remains the most immediate unresolved sectoral negotiation. Lula’s provisional measure prohibits fixed-odds operations and advertising, but negotiations could still produce a restricted, more heavily taxed reopening. Operators, payment providers, sponsors and advertisers should monitor the final congressional text. 

Across extractive industries and data centres, businesses should assess licensing, infrastructure and incentives alongside trade exposure, as foreign equipment, financing and buyers can materially affect project economics. Parliamentary agreements and appointments alongside presidential announcements.