Goldman Sachs Group Inc (GS) President Gray Cohn initially promised in April that he would increase the investment bank’s presence in Brazil from 300 to 350 employees. Since that statement, however, the Brazilian stock index, the Ibovespa, has lost 13 percent of its value. Since Cohn‘s statement, Goldman has backtracked on expanding and has  shed a quarter of its Brazil-based employees.

Several factors have contributed to the contraction of Brazil's economy. In June, the country experienced a series of riots that highlighted the economic instability and growing disparity between the classes in the country. Investment funds that track Brazil’s economy plummeted in value, as the real threat of revolution made foreign investors leery.

Brazilian President Dilma Rousseff has struggled to simultaneously placate the lower classes in the BRIC country while continuing to court investment. On July 31, Rousseff pledged $21.48 billion to overhaul Brazil’s public transportation networks, as the riots were sparked by discontent with the country’s overtaxed bus system. This comes despite the fact Brazil also froze $4.3 billion US out of its budget to post a surplus.

There is also increasing worry the country’s currency, the real, is overvalued. Interest rates have shot up, initially attracting investors like Goldman. But the rush to get into Brazil has caused a bubble in the real, and killed the value the country derives from trade.

Brazil is pinning their hopes that the economy can hold on until the 2014 World Cup and 2016 Olympics, which could potentially inject billions into the economy. The country’s has also been touting their burgeoning oil industry as an attractive investment opportunity for foreign investors. The country announced a series of strikes in 2008 that looked promising, and could still revitalize the slumping economy.

Goldman still seem committed to withdrawing. In a statement to Reuters, Goldman spokesman Michael DuVally wrote, “It would be irresponsible not to take account of changing market conditions in assessing appropriate staffing levels.”

Goldman’s stock is up .59 percent to hit $168.81 a share.