Standard & Poor's has downgraded Brazil's credit rating to junk grade. As Sara Hemrajani reports, it's further hampered President Dilma Rousseff's efforts to regain investors' trust and pull Latin America's largest economy out of recession.
Brazil was hoping for a glittering countdown to next year's Olympics. But financial troubles seem set to dampen the country's famous carnival spirit. Standard & Poor's has now slashed Brazil's credit rating to 'junk' status. That means it sees South America's biggest economy as a risky investment prospect. The reasons: a deep recession and worrying debt burden. Vicky Pryce is from the Centre for Economics and Business Research. SOUNDBITE: Vicky Pryce, chief economic advisor, Centre for Economics and Business Research, saying (English): "We're now talking about contraction of more than 2 percent this year, further contraction next year. And of course, the government deficit and debt is a serious problem. So it's no great surprise what everyone is now talking about is where will this downgrade stop, is there going to be more and probably there will be." Another concern is the country's political crisis and corruption allegations directed at President Dilma Rousseff. With Brazil losing favour with investors, it's become the latest to break the BRIC spell. SOUNDBITE: Vicky Pryce, chief economic advisor, Centre for Economics and Business Research, saying (English): "The emerging markets, as we've called them for quite some time, are not the sort of panacea in terms of continuous growth that we expected some time ago. They have problems and those problems are now coming to the fore because in many ways they overexpanded and we all thought that could carry on forever, of course it can't." Brazil's problems are being felt across the Atlantic as well. Shares in European companies exposed to the market, like Carrefour and Unilever, are sliding.