Rating Decision
Fitch Ratings affirmed Brazil’s long‑term sovereign rating at BB with a stable outlook on 17 June 2026. The affirmation reflects Brazil’s large, diversified economy, strong external finances and a flexible exchange‑rate regime that provide resilience to external shocks.
Rating Constraints and Fiscal Outlook
The rating remains constrained by high and rising government debt‑to‑GDP, budget rigidities, low governance scores and relatively low potential growth. Fitch forecasts the general‑government primary deficit to widen to 8.6 % of GDP in 2026, up from 8.1 % in 2025, versus a BB‑median of 3.5 %. General‑government debt rose to 78.6 % of GDP in 2025 from 76.3 % in 2024 and is projected to exceed 80 % in 2026.
Economic Growth and Inflation
Real GDP growth is projected at 2.1 % in 2026, down from 2.3 % in 2025. Inflation increased to 4.7 % in May 2026 from 4.4 % in April, driven by high service inflation, higher food prices and a global energy shock. Fitch expects inflation to reach 5 % by the end of 2026, breaching the upper bound of the 3 % target tolerance interval.
External Sector
The current‑account deficit remained essentially unchanged at 2.9 % of GDP in 2025, compared with 3.0 % in 2024. Fitch expects the deficit to narrow to 2.2 % of GDP in 2026 as slower growth dampens imports while commodity exports rise. International reserves stood at $371 billion in May 2026, sufficient to cover 8.1 months of external payments.
Political Context
Fitch notes a tight presidential race in October 2026 between incumbent President Luiz Inácio Lula da Silva and former deputy Flávio Bolsonaro. Economic and fiscal policy direction is likely to differ depending on the winner, with prospects for structural reforms to address underlying imbalances becoming clearer only after the elections.