BRASILIA Opposition candidate Jose Serra will struggle to hold his narrowing lead in Brazil's Oct 3 presidential election as his party seeks a way to defeat popular President Luiz Inacio Lula da Silva's hand-picked successor amid a booming economy.

With just over six months to go to election day, leading opposition contender Serra of the centrist PSDB party has seen a once-commanding lead in opinion polls over Dilma Rousseff, Lula's chief of staff, shrink as her national profile rises.

Governor of Sao Paulo state Serra, who confirmed his candidacy on Friday, lost in 2002 to Lula and is now facing his disciple. Rousseff, 62, lacks Lula's charisma, but has benefited from his popularity as they tour the country, inaugurating public works projects and promising more of the same policies for four years.

“Serra is running against Lula again, it'll be a plebiscite on Lula and he's hard to beat,” said Ricardo Guedes, director of polling firm Sensus.

Latin America's biggest economy is recovering more quickly than expected from the global crisis, and the popularity of Lula is at historic highs, leaving the opposition struggling to find a weak spot to target. Lula is constitutionally prohibited from running for a third term.

“What can you say against a booming economy and a president with that kind of approval rating? It'll be very tough,” said Sao Paulo-based political scientist Bolivar Lamounier.

Serra has maintained the support of 35 per cent of voters in opinion polls based on widespread name recognition and an image as a capable manager. But Rousseff has doubled her support to 30 percentage points in recent months, siphoning votes from other candidates.

In a worrisome development for the opposition, Rousseff appears to have the most growth potential as many of Brazil's 135 million voters still do not know her but would vote for a Lula-backed candidate.

More than half of those polled say they would vote for a candidate backed by Lula, whose approval ratings at 83 per cent are astonishing for a president at the end of his second term.Even though Lula is banned from running, the election is still largely about the former union leader whose policies have helped pull millions out of poverty and seen Brazil emerge as a major economic power.

Better off today

The vast majority of Brazilians are better off today than when Lula took office in 2002, thanks to more jobs, better pay and expanded social welfare benefits. A strong economy could buttress Rousseff's candidacy. The economy is expected to grow at a brisk 5.5 per cent in 2010 and add two million jobs.

Serra's camp looks uncertain over how to respond, raising prospects that the 68-year-old veteran politician could lose to Lula's disciple.

Some leaders of Serra's PSDB party have argued that current growth rates are unsustainable, while others say the economy could grow more quickly and criticise waste and fraud.

There is concern even among people inside the PSDB that the party still lacks a clear campaign strategy.

“We won't question progress under Lula but ask who can best accelerate it,” said Jose Anibal, former PSDB president.

Anibal said the PSDB will try to highlight Serra's executive experience as former mayor of Sao Paulo, as well as his stints as health minister and planning minister under Lula's predecessor, Fernando Henrique Cardoso.

Neither of the two leading candidates would break with the fundamentals of Lula's mostly market-friendly policies. Both are seen as favouring a stronger government role in the economy.Serra will propose tight fiscal discipline and a more efficient state to help reduce high interest rates. On foreign policy, he could cool ties with US foes Iran and Venezuela.

Arguing that current economic growth is not sustainable would be suicidal, said Ricardo Caldas, professor of politics at the University of Brasilia. “Nobody wants to hear Brazil won't grow,” he said.

Another potential problem emerged when the popular central Minas Gerais state Governor Aecio Neves this month rejected Serra's offer to join him as vice presidential candidate.

Neves, who had vied for the PSDB presidential candidacy but backed down, said he prefers to run for the Senate, potentially denying Serra much-needed support in the country's second-largest electoral district after Sao Paulo.

The party needs to fight a perception it is too elitist, concerned more with middle-class issues than those of the poor, who make up the majority of the electorate. Unlike Serra, who sometimes comes across as arrogant and pedantic, Lula has an everyman's touch and uses simple language appealing to a broad range of Brazilians.

“We have to adopt a more popular discourse,” Anibal said.

The PSDB reckons that Serra will claw back some of Rousseff's advances after he formally launches his candidacy, most likely in Brasilia on April 10. But Lula has said he has yet to begin campaigning in earnest for Rousseff.

“Serra may hold his lead for now but Rousseff is the favourite,” said political consultant Cristiano Noronha.—Reuters