Country Risk latest publications
In recent months we have witnessed a notable compression in sovereign CDS at the global level, in an economic scenario that is full of uncertainty and in which public debt is at an all-time high.
The search for yield and looser monetary policies across the board, favor sovereign spreads compression, despite a worsening global outlook, poorer incoming data and balance of risks, and the lack of improvement of fiscal disequilibria.
Models suggest 70% probability of recession within 24 months. Increased weakness in global growth. Policy uncertainty whipsawing with trade tensions. At times, key financial markets showing signs of panic-like conditions.
Brazil: recovery prospects remain in place, despite weaker growth at the beginning of 2019
Just as current medicine cannot predict exactly when someone will suffer a stroke or cancer, economic science cannot predict precisely when the next recession, financial crisis or sovereign default will occur.
Against a background of increasing concerns on economic cycle strength and uprise of global trade tensions, the central banks' more dovish tone helps that financial tensions and global risk aversion remain bounded.
Models suggest more than 70% probability of recession within the next 24 months. Shadow banking, business debt and risk appetite represent major red flags. Dovish Fed response has potential to negate downside risks in short-term.
Growth recovery is slowing down in Brazil. The deceleration in the world economy, as well as slow and limited progress in the local adoption of economic reforms –particularly in the social security- will limit the economy’s capacity for growth in the coming years. We expect GDP to grow 1.8% in both 2019 and 2020.