The outcome of the 2026 elections will be just one of the variables that will define Brazil’s institutional and business environment in the coming years.  Beyond the presidential race, the composition of Congress, the ability to coordinate between the Executive and Legislative branches, and the signals candidates send throughout the campaign will be crucial to governability and the predictability of economic and regulatory agendas.

In this interview, political scientist Bruno Kazuhiro analyzes how the electoral landscape could affect relations between the branches of government, the continuity of agendas such as tax reform and infrastructure concessions, and long-term projects in the states.  According to the expert, the challenge for foreign investors is to distinguish the noise inherent to the election period from movements that could signal bigger changes in the business environment.

What does the polarized scenario represent for governability and institutional predictability in the next presidential cycle?

There is a growing inclination to vote for the center.  A rise in mentions of writer Augusto Cury shows that a significant share of Brazilians are tired of polarization.  However, no viable electoral path currently exists outside the extremes.  Polarization consolidates votes around two main candidates, preventing a third option from reaching the runoff.  Without a doubt, the National Congress will remain divided, with difficulties in building consensus.

How will other political alliances and disputes impact the composition of the National Congress from 2027 onward, and the feasibility of implementing the economic agenda?

Regardless of who wins the presidential election, Congress will remain polarized, with a very active opposition against the incumbent government, requiring significant political maneuvering to pass each bill.  Furthermore, mandatory congressional budget amendments grant the Legislative branch greater independence from the Executive, making negotiations even more complex.  In this scenario, governing will require any president to rely not only on their allied base, but also on the parties of the so-called Centrão (center bloc).

For investors seeking long-term predictability, to what extent do the implementation of the Tax Reform and the concessions agenda depend on the outcome of the elections?

Precisely because Congress is more independent today, certain agendas advance through Congress itself, without necessarily being driven by the Presidency of the Republic.  This is the case with tax reform and concessions in various sectors.  The government of the day has the authority to introduce amendments and improvements, often of an ideological nature, but it is no longer the sole protagonist in setting the public agenda, as it was in past decades.

São Paulo also presents a polarized scenario, lacking a traditional centrist option.  What could this mean for the continuity of state projects?

São Paulo has long served as an economic engine for Brazil, due to factors such as the developmentalist logic sustained by both successive state governments and market forces.  Tarcísio de Freitas is the favorite and is expected to keep the state administration aligned with the private sector, continuing the model practiced since the 1990s.  The state does not accept stagnation, regardless of who is in power, maintaining its electoral preference for the center-right.

To what extent could nationalizing the dispute in Rio de Janeiro affect the continuity of long-term projects and partnerships in the state?

The election of a governor in Rio de Janeiro who opposed the president-elect during the campaign could reduce federal transfers and investments in the state.  Unlike São Paulo, Rio de Janeiro has relatively fragile public finances and depends on federal financial support to carry out essential infrastructure projects and public policies.

How should foreign investors distinguish between election noise — such as shifts in polls and crises involving candidates — and movements that actually signal a deeper institutional shift?

The Brazilian scenario is very volatile and can lead investors to get lost in a kind of “smoke” that clouds their assessments.  Instead of observing the speed and frequency of the waves, there is a risk of focusing only on the foam they generate.  The current government’s management of public spending already signals its priorities for a possible reelection.  On the other hand, a potential government led by Flávio Bolsonaro is likely to follow economic management guidelines similar to his father’s, though perhaps with a less confrontational day-to-day narrative. Furthermore, macroeconomic and fiscal indicators clearly show the scale of the spending adjustment any leader would need to restore the country’s fiscal balance.  In short, to cut through election noise, it is essential to prioritize data and evidence over sensationalist news and political narratives.

What signs should foreign investors monitor most closely to assess the legal certainty of their operations and the predictability of the business environment?

Although opinion polls are useful, other indicators are equally important, such as candidates’ statements in interviews and debates on sensitive topics, the names announced for top-level positions in the event of victory, and formalized international endorsements.  Furthermore, the partisan and ideological composition of the National Congress and the degree of politicization of the Judiciary are essential indicators for anticipating movements that impact the business environment, legal certainty, and the country’s institutional direction.

Bruno Kazuhiro holds a law degree from the Federal University of Rio de Janeiro and a master’s degree in Political Science from IESP/UERJ.

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