Special Dutch version
Latin America is slowing down and lower commodity prices play a prominent role. The region is vulnerable to external environment developments, but fairly resilient. Domestic factors give most countries little firepower against external shocks.
Brazil lost its investment grade with S&P on 9 September. The downgrade underlines Brazil’s enormous fiscal challenges. Political headwinds could further darken the fiscal and economic outlook.
Brazil is experiencing the strongest contraction in the last two decades on the back of an unfavourable environment, a frontloaded adjustment of economic policy and prevailing negative sentiment. Increasing political tensions complicate the situation.
A Brazilian sovereign downgrade to junk has been averted for now, as state-owned oil company Petrobras published audited accounts on 22 April. Still, risks persist.
Brazil’s economy is in the doldrums and the recent return to sounder macroeconomic policies, though positive in the long term, will weigh heavily on economic activity in 2015.