In the United States, the issue of growing public debt has been avoided by both candidates, Republican Donald Trump and Democrat Kamala Harris. Meanwhile, in Latin America, local currencies devalued throughout this year, precisely because of this fiscal concern.
Francisco Nobre, an economist at XP, who participated this Thursday (17) in the XP Morning Call program, says that debt in relation to GDP is growing rapidly in the United States, without the matter being treated as seriously as it should.
“The agenda of both candidates tends to be ambitious, recording negative fiscal results. Therefore, fiscal deficit. Debt in the United States is high and the expectation is that it will continue to grow a lot over the years”, he said.
Higher global interest rates
“So, this is a problem that the next president, whoever it is, will have to address at some point,” he added, highlighting that higher global interest rates put even more pressure on American debt.
“Here, which is an emerging region, local assets tend to be more impacted by tax issues. These concerns are increasing not only in Brazil, but in other countries in Latin America”, he explained.
For the economist, on the inflation side, we see some improvement in general, with numbers coming in a little lower, with a disinflation process happening more consistently, but still above the target.
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“When we look at Brazil, Chile, Colombia, Mexico and Peru, the governments have a very ambitious spending agenda and the prospect is that they will record fiscal deficits over the years”, he commented.
“This, combined with an interest rate that should remain at a high level for some time, even with the easing cycle, leaves the cost of debt high,” he highlighted.
“And when we look at the prospects for all these countries, the debt continues to grow”, he added.
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But, according to Francisco Nobre, the negative highlight is Brazil, where not only the debt level is higher in relation to other countries, but “the prospect of the rate of worsening is also faster”.
According to the XP analyst, the fiscal risk has been greatly reflected in assets throughout the year.
“When we look at the performance of Latin American currencies, they were very negative throughout the year, largely explained by fiscal concerns,” he stated. “Adjusting risk is crucial to the outlook for the economy,” he said.
