Credit ratings agency Standard & Poor’s (S&P), which in April 2008 awarded Brazil an investment-grade rating, has downgraded it to ‘junk’ status in its latest assessment.
The move, which came sooner than expected, saw S&P reduce Brazil’s rating from BBB-minus to BB-plus, indicating substantial credit risk.
S&P commented that the political challenges Brazil faces had continued to mount, weighing on the government’s ability and willingness to submit a 2016 budget to Congress that met economic targets.
“The negative outlook reflects what we believe is a greater than one-in-three likelihood of a further downgrade due to a further deterioration of Brazil’s fiscal position,” the agency said.
Brazil is the largest of the Latin America economies. President Dilma Rousseff’s government, which has introduced austerity measures in an attempt to control inflation, admitted last month that the Brazilian economy had moved into recession.
Forecasts for 2016-2020 place Africa as the second fastest growing region in the world (at a compound annual growth rate (CAGR) of 4.3%), just below Emerging Asia.
Sentiment in the financial services sector deteriorated in the three months to September, as firms digested the challenges of lower interest rates and the uncertainty caused by the vote to leave the European Union (EU), according to the latest CBI/PwC Financial Services Survey.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.
The proposals of both US presidential candidates could shake up operating conditions in several sectors, reports the credit ratings agency.