After a disastrous 2015, Brazilian stocks and bonds are posting the biggest gains among global peers this year. Speculation that President Dilma Rousseff could soon be ousted, ending a political stalemate that has paralyzed the country, is fueling the rally.

Yet, whoever steps into Rousseff’s shoes would face daunting challenges, from closing a crippling budget deficit to pulling Latin America’s biggest economy out the worst recession in more than a century.

“The fall of the government doesn’t mean that all problems will be solved,” said Leonardo Monoli, a partner at Jive Asset Gestao de Recursos. “On the contrary, the challenges ahead will be very big.”

Here are five factors that highlight the economic distress Brazil is in:

• Stagflation: The nation’s per-capita gross domestic product is poised to shrink 10 percent after two years of recession, looking more and more like the depression that gripped Brazil during the so-called lost decade of the 1980s, Goldman Sachs Group Inc. says. And next year looks bleak, too. The economy will remain stagnant in 2017, while inflation stays above the 6.5 percent upper limit of the government’s target, economists in a central bank survey say.
• Drowning in Debt: At about 11 percent of GDP, Brazil’s budget deficit tops that of every other major economy in the world, and the South American nation was stripped of its hard-won investment-grade status last year. With benchmark borrowing costs hovering at 14.25 percent, interest-rate payments alone will cost the governments more than 20 percent of its revenue, pushing debt levels to above 80 percent of GDP by 2018, Moody’s Investors Service says.
• A borrowing binge comes to an end: No Brazilian company has raised capital in overseas bond markets since October as an unprecedented corruption scandal at state-controlled oil giant Petroleo Brasileiro SA and an epidemic of corporate downgrades boost borrowing costs above 10 percent. Lending is also drying up in the domestic market, with bank loans growing at the slowest pace since 2003.
• Corporate distress: Brazil’s Ibovespa has returned 24 percent this year in dollar terms, almost six times the emerging-market average. The rally is at odds with a deteriorating outlook for company earnings. Analysts cut their earnings forecasts to the lowest since at least 2005, data compiled by Bloomberg show.
• Bankruptcies are on the rise: In the meantime, more companies are going out of business. Brazilian courts granted more than 5,500 bankruptcy protection filings in 2015, the most since 2008, according to Sao Paulo-based credit rater Serasa Experian.