Fitch Ratings maintained the sovereign ratings of Brazil on Wednesday citing its large and diverse economy, high per capita income and capacity to withstand external shocks.

The rating agency left its credit ratings at ‘BB-‘ with a ‘negative’ outlook.

Although the economy has flexible exchange rate, moderate external imbalances, robust international reserves and deep domestic government debt market, Fitch noted that it has rising government indebtedness, a rigid fiscal structure, weak economic growth potential amid a difficult political landscape.

The agency said the ‘negative’ outlook reflects the severe deterioration in Brazil’s fiscal deficit and public debt burden during 2020 and persisting uncertainty regarding fiscal consolidation prospects, including the sustainability of the 2016 spending cap given continued spending pressures.

Fitch forecasts the Brazilian economy to contract by 5.0 percent in 2020 before expanding by 3.2 percent in 2022.

The material has been provided by InstaForex Company – www.instaforex.com

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