Fitch Ratings has indicated that an upgrade to Brazil's credit rating is unlikely in the near future, primarily due to ongoing concerns regarding public finance improvements [a98a8388]. Currently rated at 'BB', which is two notches below investment grade, Brazil's economic outlook remains cautious despite some positive indicators. Recently, Moody's upgraded Brazil's rating to 'Ba1', reflecting a more optimistic view on the country's fiscal policies and economic recovery [a98a8388].
Brazil's GDP is projected to grow by approximately 3% in 2024, but the federal primary deficit is expected to rise to 1.0% of GDP by 2025, raising concerns about fiscal sustainability [a98a8388]. Additionally, the country's debt-to-GDP ratio is forecasted to increase from 77.8% in 2023 to 83.9% by 2026, which could further complicate efforts to regain investment grade status lost in 2015 [a98a8388].
President Lula's administration is actively working to recover this status and has engaged with major rating agencies in New York to discuss Brazil's economic policies and outlook [a98a8388]. The administration's efforts are focused on improving public finances and restoring investor confidence, which are critical for attracting foreign investment and stimulating economic growth. However, Fitch's current stance reflects a cautious approach to Brazil's creditworthiness, emphasizing the need for sustained improvements in fiscal management and economic stability [a98a8388].