Impact on the real, exports and vacations in Brazil: the scenarios that open with Bolsonaro and Lula before the runoff

The starting point is an economic relationship of enormous magnitude. Brazil is Argentina’s main trading partner and the number one destination for exports, especially in the automotive sector, which represents close to 40% of the total.

The neighboring country entered the election with a strong fiscal challenge and The runoff race opens two different scenarios. The evolution of public accounts and the capacity of the next government to generate trust will be decisive in the markets’ perception of the coming country model.

For investors, Bolsonaro’s victory would favor financial stabilitywith management oriented towards market opening, with a focus on fiscal regulation, privatizations and concessions, in line with the policies of Javier Miley.

The first effect would be seen in real. Monday started with a rise of 4,5%. Improved confidence would strengthen the currency and drive capital inflows to the country.

Last night, after knowing the first results, the ETF (an index that replicates the performance of the largest companies in that country) rose 10% on Wall Street, and the week started positively for the Brazilian stock market, with a drag on Argentine assets.

“The initial reaction for local financial assets is positivewaiting for more clarity on the implications for Argentina. This is due to Bolsonaro’s orientation, more aligned with Milei, and the sum of pro-market forces in the region,” he said. Gustavo Berholder of Studio Ber.

A stronger real would boost exports because its appreciation would improve the competitiveness of Argentine products, which would become more accessible compared to Brazilian ones. At the same time, the peso would benefit indirectly by the highest dollar incomewhich would contribute to exchange calm, especially in 2027, an election year in which there could be more local volatility.

“The second round is missing, but there are already airs of change. The market is reacting on average with an increase of 12%with share increases between 7% y 18% in dollars. It will be a scenario of greater investment attraction. Its institutional stability and reserves were always a plus when investing. This favors Argentinaand the relationship would be resumed if Bolsonaro wins,” he highlighted. Gustavo Neffadirector of Research for Traders.

Still, the main question is economic activity. If it moves forward with a fiscal program without a sharp slowdown, Argentina could benefit from increased Brazilian demand. On the other hand, if the adjustment ends up cooling consumption and investment, Brazil could import less and Argentine exports would feel the impact.

Regarding tourism, Argentina would benefit from the greater entry of Brazilians, while holidays in the neighboring country would become more expensive and would lose attractiveness compared to other destinations. Fearing this situation, in recent weeks there was an anticipation of purchase and sales grew 30% to freeze prices.

Lula’s victory would imply the continuity of a model with a greater presence of the State. If the market interprets that there will not be sufficient fiscal adjustment, exchange pressure would increase.

The weaker real would make Argentine exports more expensivewhich would suffer, and would make Brazilian products cheaper, favoring their import. That could increase competition from Brazilian companies and complicate the competitiveness of some sectorslike the automotive.

In tourism, Brazil would become cheaperwhich would further favor the flow of Argentines to its beaches, in a context in which air connectivity and reservations are growing for summer 2027. Brazil received more than 2.2 million Argentines between January and August.

“For the markets, the data becomes relevant because the change in the orientation of the largest economy in Latin America. Fiscal credibility will be the main variable to follow. “We see significant potential for Brazil to stabilize its credit rating with Bolsonaro’s victory, although it will be necessary to wait for the final result,” he explained. Thomas Haugaardmanager of Janus Henderson.

Regardless of who occupies the Planalto Palace, there is a determining variable for Argentina: how much Brazil will grow and how it will impact bilateral exchangeespecially in the automotive sector, agro-industrial products and energy.

In the first eight months of the year, Argentine exports to Brazil grew 4.1%, while imports fell 17.2%. In August, Argentina sold goods and services to Brazil for US$ 1,099 millionof which US$446 million corresponded to the automotive complex, he explained Abeceb. Dairy sales also increased 27,6% year-on-year and energy 80,8%.

Even with differences between Milei and Lula, trade continued. “Bilateral trade is firm despite the diplomatic cooling. It responds to a productive logic with automotive exchange as the backbone, which the vagaries of politics are not able to alter“, held Gustavo Peregodirector of Abeceb.