LatinNews Daily - 02 May 2024

*International credit ratings agency Moody’s has increased its outlook for Brazil from ‘stable’ to ‘positive’, although it has maintained its long-term credit ratings at Ba2, two notches below investment grade. The agency expects Brazil’s real GDP growth to average around 2% in 2024-2025. Although Brazil’s better-than-expected annual growth in 2023 was mainly due to “cyclical factors”, including a strong harvest, Moody’s anticipates that Brazil’s growth in the coming years will be “broad-based”, with the industrial and services sector expected to be “propelled by a strong labour market and higher real wages”. Other factors contributing to the improved outlook include the government’s efforts to attract private investment for renewable energy projects as well as structural reforms, such as the fiscal framework reform and the landmark tax reform passed last year. The agency suggested that Brazil’s sovereign rating could be upgraded “if the government proves successful in delivering steady improvement in the primary balance and overall fiscal deficits”. However, the government’s efforts to balance its books have been complicated by a slew of legislation that would reduce its tax revenue, a recent source of tension between the executive and legislature.