As noted in recent weeks, the situation in emerging countries is becoming more and more complicated after Russia which has suffered much oil and sanctions from Western countries after Turkey suffers a decline in its currency and tensions in the Middle East after China worried that the entire financial community, Brazil is since this week under the spotlight.
The news of the week originated from Standard & amp rating agency; Poors has downgraded the rating of Brazil on its debt with negative outlook. ! Brazil did not need this additional bad news
Indeed, for several months, all economic fundamentals are deteriorating:
growth : Brazil is heading for its worst recession in 25 years
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The Gross Domestic Product (GDP! ) declined further in the second quarter 2015. Over one year the GDP was down 2.6%. The lower international demand explains part of the poor score, restrictive monetary and fiscal measures implemented by the government explain the rest. The Brazilian economy also suffers from structural weaknesses more consistently weigh on its growth: poor infrastructure, labor costs and the weakness of the Brazilian currency in back loop analysts and investors to explain their confidence in the growth potential structural Brazil
Inflation is also a problem in Brazil. it reached an incredible level of 9.6% YoY in August. In Brazil, inflation is structurally high; Indeed wages are indexed, many local law require systematic and regular price increases, and in addition, infrastructure is weak and often gridlocked, prices rise mechanically … But especially in recent months, the sharp depreciation of the real caused higher prices of imported products.
Public finances through a period of great difficulties. Budgetary and fiscal targets set by the government appear more difficult or impossible to reach because of the stagnation the Brazilian economy in a recession and high inflation, the deficit is steadily increasing. It now stands at 8.8% of GDP and no improvement can be envisaged in the short-term …
On the external accounts as the situation deteriorates. The trade deficit worsens. The decline of the real has not improved the situation. Indeed, competitors Brazil have also seen their currencies fall and because of the lack of competitiveness of the Brazilian economy, no market share gain is possible; but above all, the decline in Chinese demand weighs several months on the level of Brazilian exports
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