Economists say fiscal risks are a concern from the US to Brazil and will impact further

In the United States, the issue of rising public debt has been touted by both candidates, Republican Donald Trump and Democrat Kamala Harris. Meanwhile, in Latin America, local currencies depreciated throughout the year, precisely because of fiscal concerns.

Francisco Nobre, an economist at XP, who participated in the XP Morning Call program this Thursday (17), says that the debt is increasing rapidly in relation to GDP in the United States, taking the matter as seriously as Not being taken as much as it should be.

“Both candidates have an ambitious agenda, which is registering negative financial results. Hence, fiscal deficit. Debt in the United States is very high and is expected to continue to grow greatly over the years”, he said.

high global interest rates

“So, this is a problem that the next president, whoever it is, will have to address at some point,” he said, highlighting that higher global interest rates put even more pressure on the US debt.

“Here, which is an emerging area, local properties are more affected by tax issues. These concerns are growing not only in Brazil, but also in other countries in Latin America”, he explained.

For the economist, in terms of inflation, we are seeing some improvement in general, the numbers are coming down a little, the deflation process is becoming more frequent, but still above the target.

“When we look at Brazil, Chile, Colombia, Mexico and Peru, the governments have very ambitious spending agendas and the likelihood is that they will record fiscal deficits over the years”, he commented.

“This, coupled with interest rates, which should remain high for some time, even with the easing cycle, makes the cost of borrowing higher,” he said.

“And when we look at the prospects of all these countries, the debt is just increasing,” he said.

But, according to Francisco Nobre, the downside is Brazil, where not only are debt levels higher than in other countries, but “the rate of deterioration is also likely to be faster”.

According to the XP analyst, fiscal risks have been largely reflected in assets throughout the year.

“When we look at the performance of Latin American currencies, they have been very negative throughout the year, mainly due to fiscal concerns,” he said. “Adjusting risks is important for the outlook for the economy,” he said.