Brazil’s Elections: Runoff Presidential Race and a Right-Leaning Congress
What the Runoff and a Shifting Congress Mean for Brazil’s Business Environment
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October 15, 2026
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Brazil’s 25 October runoff will determine whether the country moves toward greater policy and geopolitical change under Liberal Party (“PL”)’s Flávio Bolsonaro or greater institutional continuity under the Worker’s Party (“PT”)’s President Luiz Inácio Lula da Silva. Either president will face a more conservative, fragmented Congress, making coalition-building, legislative delays and uneven implementation central business risks.
PL will be the largest party in both chambers, with 28 Senate seats and 121 of 513 lower-house seats – unprecedent majority in Brazil’s recent democratic years – but no single bloc will control Congress. Neither possible president would therefore have an unrestricted mandate. Coalition bargaining, legislative delay and uneven implementation will remain central business risks.
A Bolsonaro victory could create opportunities in security, energy, critical minerals and closer US alignment, but also increase exposure to institutional confrontation, US–China tensions, regulatory divergence and stricter security compliance. A Lula victory would offer greater continuity in industrial, climate, digital and multilateral policy, but likely entail congressional resistance, policy dilution and slower structural reform.
Companies should prioritize regulatory, licensing, procurement, security and counterparty risks, while international firms and investors should stress-test exposure to trade, sanctions, payments, technology and supply chains. Regardless of the outcome, businesses should strengthen political intelligence, scenario planning, compliance controls and engagement across government, Congress, opposition groups and key international markets.
The first-round result has not resolved the five structural risks identified in FTI Consulting Brazil’s previous election-year reports; it has changed how they may be managed or intensified. Congressional negotiations, coalition agreements, appointments, court decisions and early policy signals will matter as much as the candidates’ platforms. The analysis below is therefore a scenario baseline, not a forecast.
Risk 1. Governing Capacity and Structural Friction
Flávio Bolsonaro. A Flávio Bolsonaro administration would enter office with political momentum and ideological proximity to the largest congressional party and conservative caucuses, potentially facilitating progress on security, regulatory simplification, energy and digital sovereignty. However, the PL’s 28 Senate seats and 121 lower-house seats fall short of the majorities required for constitutional amendments. The government would therefore need to negotiate with the Centrão, regional blocs and pragmatic legislators, limiting the speed and coherence of its agenda. Failure to build a durable coalition could produce policy paralysis or greater pressure on Congress, the judiciary and regulatory agencies.
Companies should monitor coalition agreements, appointments, committee leadership and the government’s relationship with the Senate and judiciary. Prepare for incremental delivery alongside episodes of institutional confrontation.
Lula. A Lula administration would face a more difficult legislative environment, with the PT holding nine Senate seats, the PL as the largest Senate party and Congress broadly more right-leaning. Lula would need to negotiate with the Centrão, regional blocs and pragmatic legislators to advance priorities such as industrial policy, social programs, climate diplomacy and digital governance. While his platform favors institutional continuity, securing congressional support may require fiscal concessions, budgetary bargaining and policy dilution, making structural reforms more difficult. Lula would likely offer greater programmatic continuity, but not easier governance.
Companies should plan for incremental policy delivery, extensive coalition bargaining and the possibility that Congress will narrow, delay or condition executive initiatives.
Risk 2. The Senate Race
The PL’s 28 Senate seats make it the chamber’s largest party, with more than one-third of the seats, although constitutional amendments still require 49 votes in the Senate and 308 in the lower house. The Senate will not function as a binary PL–PT arena: the outcome of legislation, judicial appointments and possible STF reforms will depend on conservative caucuses, Centrão parties, regional blocs and pragmatic senators. If the Judiciary does not initiate or accommodate reform, Congress may seek to impose changes through legislation or constitutional amendments, subject to judicial review. This could increase uncertainty over the STF’s autonomy and the balance among Brazil’s branches of government.
Flávio Bolsonaro. A Flávio Bolsonaro administration could coordinate more closely with the Senate on proposals affecting judicial appointments, individual decisions and the STF’s institutional authority. However, the government would still need support beyond the PL, and Centrão parties may resist the political costs of direct confrontation. The likely outcome would be sustained pressure, negotiated reforms and litigation rather than an immediate institutional rupture.
Regulatory reversals and litigation risks would rise in sectors exposed to Congress, the STF and federal agencies, including energy, mining, telecommunications, financial services and digital markets.
Lula. Under Lula, the right-leaning Senate would be a stronger constraint on executive action, using appointments, oversight and STF reform proposals to challenge the government. Lula would likely seek to preserve the Judiciary as an institutional counterweight, but a hostile Senate could increase the cost of governance and generate executive–legislative–judicial conflict.
Companies should monitor whether the Senate acts as a negotiating partner or a veto point, and whether institutional disputes create delays, legal uncertainty or changes to the enforcement environment.
Risk 3. The Weaponization of Interdependence
Flávio Bolsonaro. A Flávio Bolsonaro administration would mark a significant shift in Brazil’s foreign-policy and economic positioning, with closer alignment with Washington on security, technology, critical minerals and strategic industries. This could create opportunities in digital infrastructure, energy and supply-chain resilience, but also increase pressure to align with US positions on China, sanctions, payments and technology standards. Such a shift could strain Brazil’s relations with China and leave the country more exposed to policy changes in Washington, including a possible change in US administration.
Pix (Brazil’s instant payments system), cross-border payments, digital regulation and strategic exports could become instruments of geopolitical signaling, increasing exposure to tariffs, sanctions, technology restrictions, retaliation and conflicting compliance requirements.
Companies should stress-test exposure to US–China tensions, assess payment and technology dependencies, and monitor potential regulatory alignment with Washington. A closer US relationship could generate opportunities but also raise market-access risks and compliance costs, particularly for businesses dependent on Chinese capital, inputs, technology or export markets.
Lula. A Lula administration would represent greater continuity in Brazil’s foreign policy, emphasizing multilateral institutions, BRICS, climate negotiations, international cooperation and global frameworks for digital governance. This could reduce the risk of abrupt diplomatic realignment, although Lula’s defense of Brazilian sovereignty over natural resources, technology and domestic regulation would continue to generate disputes with Washington and other partners.
Companies should expect a more diversified and multilateral approach, but continue monitoring Brasília, Washington, Brussels and Beijing for developments affecting digital rules, payments, critical minerals, tariffs and market access.
Risk 4. Public Security Narratives as Electoral Instruments
Flávio Bolsonaro. A Flávio Bolsonaro administration would place organized crime, sovereignty and state authority at the center of its security agenda. Proposals to designate the PCC and CV as terrorist organizations could align domestic policy more closely with US security frameworks, expanding scrutiny of banks, payment providers, logistics, ports, mining, agribusiness and cash-intensive businesses.
Companies should strengthen counterparty, beneficial-ownership, sanctions, AML and adverse-media controls. US-dollar and correspondent-banking exposure would be particularly sensitive, with risks including enhanced scrutiny, transaction delays, de-risking, higher compliance costs and reputational damage from direct or indirect links to criminal networks.
Lula. A Lula administration would be less likely to adopt terrorist designations or exceptional security measures, favoring federal coordination, international cooperation and institutional capacity. This could reduce politically driven changes to security classifications, but not the underlying risks associated with organized crime, money laundering and illicit finance.
Companies in exposed sectors should expect continued compliance scrutiny from Brazilian regulators, global banks and international counterparties. They should monitor both Brasília and Washington, as US standards may apply regardless of Brazil’s policy choices, while security-related associations would remain a cross-cutting reputational risk.
Risk 5. Ideological Asymmetry and Volatility
The election has reinforced Brazil’s ideological asymmetry: Flávio Bolsonaro and the PL enter the runoff with electoral momentum and the largest congressional presence, while Lula retains the presidency, a strong PT base and the advantages of incumbency. These competing sources of strength will continue to drive shifting narratives, coalitions and market volatility, even if macroeconomic fundamentals remain stable.
Flávio Bolsonaro. A Flávio Bolsonaro administration would likely mobilize around security, sovereignty, lower taxes and institutional confrontation. If Congress delays flagship measures, the government could rely more heavily on political messaging, increasing polarization and disputes with the STF, regulators and companies in strategic or visible sectors. Companies should treat narrative volatility as an operational risk.
Companies should maintain cross-party stakeholder engagement, monitor issues involving security, sovereignty, digital regulation and foreign capital, and prepare rapid-response protocols while avoiding unnecessary partisan identification.
Lula. A Lula administration would likely offer greater institutional continuity, but it would govern with a stronger right-leaning Congress and Bolsonaro-aligned opposition. Political volatility would therefore shift from executive confrontation toward congressional disputes, judicial controversies and opposition campaigns over security, taxation, sovereignty and foreign companies.
Companies should plan for greater institutional predictability, not political neutrality. Stakeholder mapping should include the government, PL-led opposition, Centrão, regional blocs, civil society and international actors, with scenarios covering regulatory scrutiny, congressional obstruction and reputational campaigns.
What Companies Should Do Now
The election result has created a defined institutional configuration but not a defined presidency. Companies should prepare for two presidential scenarios within the same broader congressional context.
Understand – Political and Regulatory Intelligence Mapping
- Map the new administration’s early policy signals, coalition agreements, and legislative priorities against company-specific risk exposure.
- Track the PL’s relationship with Centrão parties, regional blocs and conservative caucuses rather than treating Congress as a single bloc.
- Monitor the Senate’s approach to judicial appointments, STF reform proposals, regulatory agencies and impeachment proceedings.
- Assess exposure to security-related compliance requirements, geopolitical positioning and regulatory divergence in sensitive sectors.
Prepare – Scenario Planning
- Model separate Flávio Bolsonaro and Lula scenarios while keeping the congressional composition constant.
- Treat policy paralysis, negotiated incrementalism and institutional confrontation as distinct risk pathways.
- Stress-test assumptions around licensing, regulation, taxation, public procurement, cross-border payments, digital governance and security compliance.
- Use the period between the runoff, the 1 January inauguration and the first 100 days as a critical intelligence-gathering window.
Engage – Stakeholder and Policy Engagement
- Establish credible relationships with the new government’s policy teams, sectoral working groups, and key legislative actors to manage regulatory uncertainty and contribute to a more stable business environment.
- Engage with opposition actors and civil society, not only the governing coalition, given the polarized political environment.
- Extend monitoring beyond Brasília to include Washington, Brussels, Beijing and other jurisdictions shaping trade, sanctions, technology and sustainability standards.
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
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October 15, 2026
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