Cardoso favored for re-election in Sunday's Brazilian ballot

RIO DE JANEIRO, Brazil (CNN) -- Voters in Brazil went to the polls Sunday to pick their next president, with incumbent Fernando Henrique Cardoso considered the overwhelming favorite, despite an ever-worsening economic situation in Latin America's largest country.

The main question will be whether Cardoso, a centrist, can capture the majority he needs to avoid an October 25 runoff against his strongest opponent, leftist Luiz Inacio Lula da Silva, known by Brazilians simply as Lula.

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Correspondent Luis Clemens reports from Brazil
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A runoff could trigger uncertainty in the country's financial markets, already battered by the recent worldwide financial turmoil.

A pre-election survey by the prestigious Ibope polling institute put Cardoso's support at 47 percent, while another poll Friday showed him with 44 percent. Lula trails Cardoso by about 20 points.

Governorships, Congress seats also up for grabs

The presidential campaign officially ended at midnight Thursday

Should he win, Cardoso, first elected in 1994, would be the country's first re-elected president. He persuaded Congress to rewrite the constitution to allow a president to run for a second term.

Also up for grabs Sunday are the governorships of Brazil's 27 states, all 513 seats in the lower house of Congress, a third of the 81 Senate seats and 1,045 posts in state assemblies. Voting is compulsory for Brazilians between 18 and 70.

With 106 million voters, the ballot is likely to be the largest democratic election ever held in Latin America. For the first time, a majority of voters will use electronic voting machines, which are expected to speed up tallying of the results.

Cardoso: No easy future

Cardoso

Cardoso, 67, a sociologist who served as Brazil's finance minister before becoming president, shot to power after designing the Real Plan, an economic stabilization blueprint that rescued Brazil from a ruinous cycle of hyperinflation running as high as 50 percent a month.

The Real Plan has defied critics who predicted it wouldn't work. Inflation this year is expected to be about 1 percent.

But unemployment and interest rates have risen, and the budget deficit has climbed to $60 billion. Nervous investors have been pulling their money out of the country, and hard currency reserves have plunged from $74 billion in April to $45 billion last week.

An IMF-led fiscal package is now seen as Brazil's best hope of avoiding a currency collapse. But in exchange for international support, the government will likely have to push for sweeping spending cuts and tax hikes after the election.

"I don't promise an easy future. Brazil cannot isolate itself from the rest of the world. Brazil is in the midst of some turbulence," Cardoso said.

Lula: Government hiding extent of crisis

Lula

Ironically, as the economic situation has worsened, the president's popularity has only increased, a situation that has baffled his opponents, including Lula, 53, a combative trade union leader making his third bid for Brazil's presidency. He has accused the government of hiding the full extent of the crisis.

"The people will vote without the government admitting the importance of the crisis and accepting the blame for what has happened," he said.

Lula has attacked the IMF, playing on Brazilians' painful memories of the 1980s, when austerity measures recommended by the fund tipped the country into what is known here as the "lost decade."

"In my government, I will value human beings, work and production," Lula said in his last campaign broadcast. "The bankers and the international moneylenders can count on it -- over the next four years, I will govern for the poor."

In 1989, in the first democratic presidential election after nearly three decades of military rule, Lula was narrowly beaten in a runoff by Fernando Collor, who was later impeached for corruption. But Lula didn't fare as well in 1994, when he was soundly beaten by Cardoso in the first round of voting.

Electoral Tribunal workers load electronic voting machines onto a truck for Sunday's election

This time around, Cardoso's supporters have been pushing the message that a victory by the left-leaning Lula would result in chaos and economic instability.

Lula is a member of the Workers Party. His candidacy is supported by a number of other left and left-of-center parties, including the Democratic Labor Party, the Brazilian Socialist Party, the Communist Party of Brazil and the Brazilian Communist Party.

Cardoso is a member of the centrist Brazilian Social Democracy Party. He is supported by the conservative Liberal Front Party and also by the Brazilian Labor Party, the Brazilian Progressive Party and the Social Democratic Party.

Correspondent Luis Clemens and Reuters contributed to this report.