Fitch Ratings has reaffirmed Brazil’s credit rating at “BB” with a stable outlook, recognizing the country’s economic strengths and challenges. Despite boasting a large and diversified economy with high per capita income and strong external finances, Brazil faces concerns regarding economic growth potential, governance issues, and rising public debt relative to GDP.
For 2024, Fitch projects a primary deficit of 0.7% of GDP, deviating from the government’s zero deficit target, which may require spending cuts. The rating agency also highlighted the uncertainty in reducing fiscal deficits and the lack of clear government support for necessary spending changes, reflecting the ongoing struggle to balance fiscal responsibility and economic growth.
Despite these challenges, Fitch recognized Brazil’s resilient domestic economic growth, projecting an increase in GDP and maintaining a trade surplus. These projections underscore Brazil’s potential for steady economic growth, emphasizing the need for strategic fiscal management and policy reforms to ensure long-term stability.
The Fitch rating serves as a reminder of Brazil’s strengths and areas needing improvement, highlighting the importance of addressing fiscal challenges to shape the country’s economic future.