Brazil's Rousseff headed for re-election victory

SAO PAULO (Reuters) - Brazil's leftist President Dilma Rousseff was on the verge of winning a second term in Sunday's election, buoyed by strong support from the poor following one of the country's closest, most divisive campaigns in decades.

Rousseff had 51.3 percent of votes in a runoff against Senator Aecio Neves of the centrist Brazilian Social Democracy Party (PSDB), who had 48.7 percent support with more than 97 percent of the votes tallied, according to official results.

About 2.7 million votes separated the two candidates.

At a hotel in Brasilia where Rousseff was due to speak, party supporters waved red flags and jumped up and down, screaming in celebration.

If as expected the result holds, it will mean another four years in power for the Workers' Party, which since taking the reins of Latin America's largest economy in 2003 has virtually transformed Brazil.

During that time, economic growth has lifted 40 million from poverty, reduced unemployment to record lows and made big inroads against hunger in what remains one of the world's most unequal countries.

The party's star has faded recently. The economy has slowed dramatically under Rousseff's heavy-handed and often unpredictable policies, making Brazil's glory days of robust growth last decade an ever-more distant memory.

Numerous corruption scandals, high inflation and frustration over poor public services like health care tempted many to consider a switch to Neves' more pro-business agenda.

Yet Rousseff and her supporters spent the campaign warning voters, especially the poor, that a vote for the PSDB would mean a return to the less compassionate, more unequal Brazil of the 1990s - an argument that Neves rigorously denied, but ultimately appears to have prevailed anyway.

"We need Dilma to continue the programs that improve the lives of those in need," said Livia Roma, 19, a university student in Sao Paulo, as she voted on Sunday. "I didn't vote for myself, but for the minorities and less fortunate classes."

Investors have generally disliked Rousseff's interventionist management of state-run companies and other sectors of the economy, and Brazil's financial markets plummeted last week when polls showed she was likely to win a second term. They could see another selloff on Monday.

With 200 million people and a gross domestic product of some $2 trillion, Brazil is Latin America's largest economy and its most populous country.

By re-electing Rousseff, it will remain on a middle ground between more socialist governments in Venezuela and Argentina, and the freer-trading, faster-growing countries on the Pacific coast that include Colombia and Chile.

SUPPORT FROM THE POOR

Rousseff owed her victory to overwhelming support from the roughly 40 percent of Brazilians who live in households earning less than $700 a month.

They have benefited from the Workers' Party's rollout of a programme that pays a small monthly stipend to one in four Brazilian families, as well as federal housing programs, government-sponsored vocational schools and an expansion of credit to the working class.

Rousseff, 66, is unlikely to enjoy much, if any, of a honeymoon when her second term starts on New Year's Day.

Recent allegations of systemic corruption at state-run oil giant Petrobras roiled the final days of the campaign and are likely to be a major political headache in coming months and years as prosecutors pursue those responsible.

The economy slipped into a recession earlier this year, and ratings agencies have warned that a credit downgrade is possible unless Rousseff makes hefty spending cuts to correct deficits that have mushroomed in recent months.

Her aides have said she will try to win back the confidence of financial markets by announcing a more pragmatic finance minister for her second term, although many investors worry that Rousseff will continue to call most of the shots herself.

(Additional reporting by Leonardo Goy in Brasilia and Liege Albuquerque in Manaus; Editing by Todd Benson and Kieran Murray)

WhatsAppFacebookTwitterLinkedinBeloudBluesky