ISTANBUL
The narrow re-election of Dilma Rousseff as Brazil’s new president is likely to have notable effects on the country’s economic course, credit rating agency Moody’s said Thursday.
Her re-election "poses potentially significant challenges to policy formulation over the next four years because it has highlighted the polarization of the country's electorate between those calling for policy continuity and those demanding policy changes and reform," Moody's said in a statement on its website.
Moody's Investors Service said that Rousseff's victory in the presidential elections might have an important effect on Brazil’s credit rating, which currently stands at Baa2, as well as the credit quality of its companies and banking sector.
"For banks, the impact will hinge on the role that public lenders play over the next four years.
"Efforts by the Rousseff administration to strengthen economic growth, combat inflation and boost business confidence will likely entail a fiscal and monetary rebalancing that could have material implications for the loan books and profits of the country's public and private banks," Moody's said.
The agency stressed that Rousseff has to re-earn the trust of investors in order to reduce the public debt level of the country.
The statement added that exporting sectors of Brazil, such as pulp and paper, mining and protein, would benefit from the slide in the value of the Brazilian real.
However, the agency also pointed out that "tighter fiscal policy could lead to higher corporate tax rates and a reduction of corporate subsidies and incentives, which would affect many sectors."
www.aa.com.tr/en
