Following the worst Christmas for retail in the past 10 years, Brazil has very little to look forward to in the first quarter of 2016. It gets a bit worse from here.

The Central Bank said Christmas week that inflation will likely end the year at 10.8%, up from current levels of 10.4%. There is also no chance that Brazil’s inflation comes within target next year, meaning monetary authorities will have to raise interest rates if they are to be taken seriously as inflation-targeters. In fact, the Bank upped the ante on the economy missing the 6.5% inflation target next year to 40% from just 20% a month ago.

Inflation is forecast to decline over the next four quarters however as Brazilian consumers spend less and demand hits the skids. Most of the inflation pressures came from the government ending electric power subsidies and raising regulated price rates, including gasoline prices.

Brazil GDP is seen ending the year down 3.6% and down 1.9% next year based on the dollar exchange rate of R$3.9.

And then there’s another stat the macro-investors like to consider: Brazil’s overall debt burden. No one thinks Brazil is going to default next year, or anytime in the near future for that matter. But it’s debt-to-GDP ratio is seen hitting 70% next quarter if inflation acts as expected. That will be the highest level in more than 14 years. The current debt ratio is 66.7%, as of Nov. 30.

There’s another thing Brazilians and Brazil investors will still have to tend with in the first quarter: the impeachment process. That carnaval of errors will take a breather when the real Carnaval party begins on Feb. 7.

Political turmoil will continue to weigh on sentiment in Brazil. Investors who feel that the currency can hold steady at these levels and even strengthen in the year ahead might be wise to buy local currency debt, on the idea that the Brazilian real will strengthen next year and inflation will cooperate by the end of 2016. Lower inflation will give the central bank room to cut rates, pushing up bond prices. Yield on local currency fixed income is around 14%.