Can Brazil Turn Its Economy Around?

Can Brazil Turn Its Economy Around? by Knowledge@Wharton

Felipe Monteiro on Brazil’s Sovereign Rating Downgrade

Rating agency Standard & Poor’s downgrade last week of Brazil’s sovereign rating to the non-investment or “junk” category is a wake-up call for the country to correct its finances and build the political consensus to achieve that. Brazil is facing a severe recession, and its economy is expected to shrink by 3% this year and again in 2016, before returning to modest growth by 2017, according to S&P.

It does not help that an economic slowdown is also underway in China, Brazil’s main trading partner, hurting the latter’s exports to that country. Meanwhile, Brazil is...