Research Update: Brazil Outlook Revised To Stable From Positive On Uncertainty Related To COVID-19; 'BB-/B' Ratings Affirmed

We expect Brazil's GDP growth and fiscal performance to suffer in 2020 due to the COVID-19 pandemic and extraordinary government spending, before gradual economic recovery and fiscal consolidation resumes. In addition, uncertainty has increased regarding the country's capacity to advance its structural reform agenda once the pandemic dissipates, given ongoing disagreement between the executive and legislative powers. We are revising our outlook on Brazil to stable from positive and affirming our 'BB-' long-term and 'B' short-term sovereign credit ratings. The stable outlook reflects our updated fiscal and economic expectations after the COVID-19 shock, and our assumption of slower-than-expected progress to pass and implement meaningful legislation to reduce structural fiscal vulnerabilities and to raise medium-term GDP growth prospects. On April 6,

...- We expect Brazil's GDP growth and fiscal performance to suffer in 2020 due to the COVID-19 pandemic and extraordinary government spending, before gradual economic recovery and fiscal consolidation resumes. - In addition, uncertainty has increased regarding the country's capacity to advance its structural reform agenda once the pandemic dissipates, given ongoing disagreement between the executive and legislative powers. - We are revising our outlook on Brazil to stable from positive and affirming our '##-' long-term and 'B' short-term sovereign credit ratings. - The stable outlook reflects our updated fiscal and economic expectations after the COVID-19 shock, and our assumption of slower-than-expected progress to pass and implement meaningful legislation to reduce structural fiscal vulnerabilities and to raise medium-term GDP growth prospects....

Research Update