Fitch affirms Brazil's credit rate with negative outlook
Six months after the last assessment, ratings agency Fitch affirmed Brazil's credit rating at BB with a negative outlook this Friday (Nov. 10). The country remains two levels below investment grade (a status that serves as a guarantee of low risk of default for investors).
The negative outlook means the country's credit rating can be downgraded any time before the next review. According to Fitch, several factors justify the concern with Brazil's fiscal situation.
Tha ratings company's statement mentions the structural weakness in the countries' public finances, high government indebtedness, the weak growth prospects and weaker governance indicators compared with peer emergent economies.
The agency added there is a risk that political instability jeopardizes the voting of structural reforms designed to improve the public budget, of which the social security reform is the main one. Fitch, however, stresses theses difficulties are partly counter-balanced by Brazil's economic diversity and entrenched civil institutions.
The risk assessment by foreign agencies works as a tool to measure the confidence of international investors in a country's economy. The document released by Fitch also reports that the agency forecasts a 0.6% growth for Brazil's Gross Domestic Product (GDP) in 2017 and a 2.6% medium growth rate in 2018 and 2019.
Translated by Mariana Branco