Standard & Poor’s (S&P) Global Ratings upgraded Brazil’s credit outlook from “stable” to “positive” on Wednesday, marking the first such upgrade since 2019.
Despite this positive shift, the agency maintained the country’s sovereign credit rating at “BB-“, a status that still implies a “speculative grade”.
The revised outlook signifies that Brazil, the leading economy in Latin America, is less susceptible to short-term risk.
However, it continues to grapple with potential adversities in the financial and economic arenas over the medium and long term, as per S&P’s analysis.
The rating agency explained that although Brazil continues to run sizeable fiscal deficits, the country’s robust economic activity and a more discernible fiscal policy trajectory could result in a government debt burden that is “lower than initially expected”.
S&P emphasized, “Our positive outlook is based on the prospect that ongoing measures to address economic and fiscal inflexibilities can bolster our view of Brazil’s institutional framework’s resilience and decrease risks to its monetary flexibility and net external position.”