Brazil: Between a Rock and a Hard Place

By Danilo Kawasaki


Brazil finds itself at yet another crossroads. Following the worst recession on record, a massive corruption scandal, and the most unpredictable presidential election since 1989, Brazilians will choose their next President in October. Here is what you need to know:

Rules of the Game

The president is elected to a four-year term by absolute majority vote through a two-round system. If no candidate gets more than 50% of the votes in the first round (October 7th, 2018), the top two candidates will go head-to-head in round two (October 28th, 2018).

Voting is mandatory if you are between the ages of 18 and 70 years old and optional if you are 16-17 years old or above 70.

The Players

There are five presidential candidates with a mathematical chance to win this upcoming election. However, as we approach October 7th it looks like the battle will be between leftist and onetime mayor of Sao Paulo, Fernando Haddad and far-right former army captain Jair Bolsonaro.

Fernando Haddad replaced former President Lula da Silva as the Workers’ Party candidate. Lula has been jailed for corruption and has been ruled ineligible to run for President. Lula’s successor in the last election, President Dilma Roussef, was impeached in 2016. With that track record, you must be wondering why anyone would vote for Haddad. There is no simple answer, but the reality is Lula is still a very popular figure within the working-class majority in Brazil. They are willing to overlook the corruption scandals and vote Haddad with the hopes of replicating the tremendous economic boom Brazil had under Lula from 2002 thru 2010.

Jair Bolsonaro, still hospitalized as he recovers from an apparent assassination attempt earlier this month, is a former military officer and a member of the Rio de Janeiro Chamber of Deputies since 1991. His tough stance on corruption and crime has catapulted him to the top of the polls. He is seen by his supporters as an uncorrupted, straight-talker who is not afraid to do what is needed. However, Bolsonaro’s views on women’s rights, the LBGT community, and other minority groups have many voters questioning his morals and social views. Needless to say, Bolsonaro is not a very popular candidate amongst women and minority groups.

The Issues

Whomever wins this election will have to address major economic, social, and moral issues that have been plaguing the country for almost a decade. Here are the most pressing items:

- Economic/fiscal issues
o Tax reform: more than 40% of the population are overdue their taxes or don’t even pay them.
o Pension reform: high replacement rates at much younger age; contributing to Brazil’s deficit at an alarming pace.

- Social issues
o Crime and urban violence: with murder rates soaring, Brazilians are going out less and some are even leaving the country in record numbers.
o Education: public education is failing. Teachers get paid very little (U$500/month) and illiteracy rate is around 10%.
o Health care: Brazil ranks 125th out of 191 countries on the World Health Organization list. Something to be ashamed of for the 8th largest economy in the world.

- Moral issues
o Corruption: Operation Car Wash arrested many of our top politicians, including Brazil’s former President Lula da Silva. Brazil’s next President must have a clean record and a zero tolerance against corruption.
o Human rights: Brazil is a very diverse country. Immigrants, people of all races, religions, and sex orientations should have the freedom to express themselves without fear of being reprimanded.

As a Brazilian-American, it saddens me to see how polarizing this Presidential race has become. A country with so much potential and great people deserves better choices. Brazilians will have the difficult task to choose between a rock and a hard place.

Securities offered through LPL Financial, Member FINRA( (

Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Gerber Kawasaki and Gerber Kawasaki Wealth and Investment Management are separate entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

Gerber Kawasaki, 2716 Ocean Park Blvd. #2022 Santa Monica, CA 90405. Contact us at (310) 441-9393