Brazilian President Luiz Inácio Lula da Silva faces a series of major political and economic challenges after securing a historic fourth term in office. Despite winning Sunday's presidential runoff, the left-wing leader will have to navigate a deeply divided electorate, an unfriendly Congress, mounting fiscal pressure and complicated relations with US President Donald Trump.
According to a report published by on October 26, 2026, Lula won the runoff election with 51.7% of the vote, defeating right-wing challenger Flavio Bolsonaro, who secured 48.2%. The narrow victory highlights the continuing political divide in Brazil, where support for the right-wing movement associated with former president Jair Bolsonaro remains strong.
Here are the four major challenges Lula will face during his next term.
1. Governing without a parliamentary majority
Lula's first major challenge will be securing support in Congress. Recent legislative elections strengthened right-wing parties, with Bolsonaro's Liberal Party emerging as the largest force in both chambers.
The party secured 121 seats in the 513-member lower house and 28 seats in the 81-member Senate, according to the report.
Without a parliamentary majority, Lula will need to negotiate with centrist and centre-right parties to pass legislation. These negotiations could become increasingly difficult as lawmakers gain greater influence over federal spending and policy decisions.
2. Rising debt and economic pressure
Brazil's financial situation presents another significant challenge. Government spending exceeds revenue, public debt has risen above 80% of gross domestic product (GDP), and the central bank maintains high interest rates to control inflation.
Economists have warned that the country's fiscal difficulties could develop into a broader economic crisis if they are not addressed.
However, reducing expenditure will not be easy. Lula has built much of his political support around welfare programmes that help lower-income families. Cutting spending or introducing unpopular fiscal measures could therefore create tension between economic priorities and his social commitments.
3. Tackling crime and insecurity
Public safety was a major issue during the election campaign, with violence and organised criminal groups among the biggest concerns for Brazilian voters.
Lula faced criticism from opponents who accused him of being too soft on crime. During his next term, he will face pressure to strengthen security measures and tackle criminal organisations and militias that control territory in several cities.
The debate over juvenile justice is also likely to continue. Lula has expressed support for lowering the age of criminal responsibility from 18 to 16 for particularly serious crimes, while sections of the political right have demanded a reduction to 14.
4. Managing relations with Donald Trump
Relations with Washington could prove another major test. Lula has repeatedly emphasised Brazil's sovereignty and criticised what he sees as excessive American intervention in Latin America.
Trump previously imposed tariffs on Brazilian goods amid tensions over legal proceedings involving his political ally Jair Bolsonaro. Additional tariffs on certain products have further complicated bilateral relations.
Lula will need to protect Brazil's economic interests while managing relations with the Trump administration. His challenge will be to balance diplomatic engagement with his commitment to an independent foreign policy.
A difficult road ahead
Lula's fourth term begins with a strong electoral mandate but significant obstacles. His ability to build political alliances, stabilise public finances, improve public safety and manage relations with Washington will shape Brazil's direction over the coming years.
The narrow election result also suggests that political divisions will remain a defining feature of the country's future.
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