Standard&Poor's Ratings Services' low-investment-grade ratings on the Federative Republic of Brazil are supported by the government's solid commitment to prudent macroeconomic policies, especially recently, when the international credit crunch and global economic slowdown have affected the local economy. To protect recent improvement in economic fundamentals and regain a sustainable growth trajectory once the global economy stabilizes, it is critical that Brazil reaffirm this commitment. President Lula's strong popularity will likely facilitate the implementation of policy to deal with the significant economic challenges in 2009. Despite Brazil's improved fundamentals, the negative external shock hurt economic activity. Brazil's GDP decline 3.65% in the last quarter of 2008 and 0.83% in the first quarter of 2009 (each compared with the previous
