Brazil: Electoral Authority Complicates Party Alliance Plans for October; May Inflation Low but Copom Minutes Point to Caution; April Industry Output Weaker

Summary

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The rules surrounding political party alliances for the forthcoming presidential, gubernatorial and congressional elections on 1 October are still subject to clarification. But the latest pronouncement by the chief of the electoral authority this week indicates that there may be less room for manoeuvre than some political parties had expected. For the moment, this seems to be leading to some reconsideration of the recently confirmed alliance between the two main opposition parties, the PSDB and PFL, to back the candidacy of Geraldo Alckmin while another major group, the PMDB, is also reviewing its options. While the ruling Workers Party (PT) is not immune, it appears unlikely to present a major handicap for President Lula da Silva's re-election plans. Low May inflation has been confirmed, although this was anticipated when the monetary policy committee (Copom) made its rate cut at the end of April. Even so, the Copom minutes show that a cautious stance will prevail in the period ahead, appropriate to uncertain conditions in the international arena as well as the domestic economic performance. April's industrial output growth was weaker after the 4.6% expansion in Q1, but this partly reflects fewer working days in the year-on-year comparison and there are good grounds to expect overall GDP growth will continue to improve on the 2.3% rise in 2005.

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Brazil: Electoral Authority Complicates Party Alliance Plans for October; May Inflation Low but Copom Minutes Point to Caution; April Industry Output Weaker

Electoral authority complicates outlook for party alliance plans

With a little under four months until the elections are held for president, federal legislature, state governors and legislatures, uncertainty prevails over the application of the so-called rubric of "verticalizacao" by the competing political parties. In essence, the ruling specifies that parties in a...

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