After a deep recession and a period of anemic growth, recent fiscal reforms and improvements to the labor market could help boost growth in 2020.

“We are cautiously optimistic that Brazil can finally escape that 1% pace to grow around 2% this year,” says Gabriela Santos, Global Market Strategist at J.P. Morgan’s Asset Management Strategy.

In addition to the pension reform approved by the Brazilian Congress in 2019, experts anticipate a series of wide-ranging reforms aimed at cutting spending and reducing the size of the state to drive down its chronic fiscal deficit. “Much more needs to be done to boost Brazil’s productivity, and I think we’re just in the early stages of what should ultimately be a long reform agenda,” says Santos.

The slowdown in the global economy and unresolved trade conflicts between the United States and China represent great challenges for the future of Latin America’s largest economy. “As an emerging market, Brazil is very dependent on global risk appetite. And when investors are feeling a little bit more cautious about the world, they’re less willing to investing in emerging markets.”

Within a regional framework of social instability and civil unrest—as is the case in Chile, Ecuador and Colombia—Brazil’s leaders must take into account its structural weaknesses as the country moves forward with its fiscal reforms. “Social protests in neighboring countries are reflective of frustration in the region with inequality, sluggish growth and corruption. I think there is a lesson in there for Brazil—to have the conviction to implement some of the tough but necessary reforms around fiscal issues, but to marry that with a little bit of social spending and job-generating reforms,” says Santos. “Otherwise, the population will become frustrated and eventually, as much as the administration has good intentions, it can run out of time.”