Economic outlooks decline for Brazilian firms and German industry

Moody's has issued a report projecting a 3.3% decline in EBITDA for Brazilian companies by 2027. This downward pressure on cash flow is attributed to high domestic interest rates, international conflicts, Chinese competition, and the climatic effects of El Niño. The agency noted that nearly one-third of rated corporate debt in Brazil is indexed to floating rates, creating risks for sectors such as retail, agribusiness, energy, and sanitation. El Niño specifically threatens agricultural yields and electricity generation due to potential crop losses and reduced reservoir levels.

In Germany, the Ifo Institute reports a significant deterioration in the industrial business climate. The business climate index fell to -35.0 points in September, a sharp decline from August's -22.0 points. The automotive sector has experienced a particularly strong setback, with industry experts describing the sector as being stuck in a crisis. This pessimism extends to export expectations, employment outlooks, and order books, following a notable drop in third-quarter financial results.