Brazil did not need more drama right now

Brazil's president Dilma Rousseff was suspended for aperiod of up to 180 days after the country's Senatevoted to put her on trial. Vice president Michel Temerassumed the role of acting president.

This political stalemate is yet another major challengefor the Brazilian economy and adds up to the pile. Evenif some see an opportunity to initiate much neededreforms, prolonged political uncertainty will inevitablyexacerbate an already challenging economic situation.

Brazil will remain in recession: GDP will contract by -3.5% this year, after -3.8% in 2015. Falling demand,strong inflationary pressures, growing deficits are onBrazil's list of ailments. Though the situation easedslightly in the past months, tough policy choices are yetto come.

Falling demand and tight financing conditions weigh on the private sector: insolvencies are expected to increase by +22% this year, after soaring by +25% in 2015. More social unrest remains a major risk.