“If its economy was normal, Brazil would be the biggest and most dynamic market for watches,” said Ion Schiau, vice president of sales and marketing of the Swiss independent brand HYT, which recently pulled out of the country after 18 months. “There are very few players for the amount of people.”

A combination of political and economic problems, import and sales taxes and rising interest rates — which deter buyers from once-popular installment-payment buys — have kept this country of more than 200 million in the background while prompting most wealthy Brazilians to make their luxury purchases while on vacation.

In 2015, valued at 38 million Swiss francs, or $38.25 million, Brazil’s watch market languished outside the Federation of the Swiss Watch Industry’s top 30 export markets. It trailed Greece, at No. 30 with 89 million francs, according Jean-Daniel Pasche, the federation’s president.

“The Brazilian economy is going through a very nasty, long deep recession,” said Alberto Ramos, Goldman Sachs’ chief economist for Latin America, on the telephone from New York, citing the 4 percent contraction of its gross domestic product in 2015 and predicting a further shrinking of 2 percent to 3 percent this year.

Inflation has hit a 12-year high of 10.27 percent; unemployment is 7.6 percent, its highest level since 2009; and the country’s investment status has been downgraded to junk, limiting much needed foreign investment.

The exchange rate also has declined steeply, “so luxury goods which used to be more affordable are a lot pricier now than two years ago,” he said. The drop has been more than 60 percent — 4.106 real to the dollar on Jan. 21, from 2.564 real to the dollar year over year, according to the Brazilian Institute of Geography and Statistics.

Paying on time

Interest rates have risen to 14.25 percent, a nine-year high, so the credit that Brazilians traditionally have relied upon for watches and other luxuries is significantly more expensive.

“Customers buy in 10, 12 and sometimes 15 months on their Visa or Amex card,” said David Zilberman, chief executive of one of Brazil’s most prominent multibrand watch boutiques, Sara Joias, which sells timepieces including Audemars Piguet, Breitling and the exclusive Ballon Bleu de Cartier’s vibrating diamond-set watch.

Yet in the current climate, Reynaldo Saad, consumer business partner at Deloitte Brasil in São Paulo, said, “People are still buying but in less quantity, less frequently and over a longer term.”

The government has long relied on taxation but, said Gil Mendes, tax partner at Ernst & Young Serviços Tributários in São Paulo, “we don’t rely on income tax, which is only 27.5 percent at its highest rate. Instead, we rely on indirect taxes on buying goods.”

So the combination of federal and state taxes can double the price of the watch, said Michel Cheval, IWC Schaffhausen’s regional director of Latin America and the Caribbean. “We can’t be 100 percent more expensive than the rest of the world, so we subsidize this and don’t reflect it in our prices as we are building our brand locally in the long term to maximize the market when the economy picks up, which we expect to be in two years,” he said. As part of that long-term perspective, IWC opened a flagship boutique in São Paulo’s swankiest shopping mall, JK Iguatemi, in 2012.

For Roberto Stern, chief executive of the international watch and jewelry brand H. Stern, headquartered in Rio de Janeiro, there also is the cost of dealing with the country’s tax bureaucracy, even if, as at H. Stern, a house assembles Swiss-made watch components in Brazil. “I spend a half a day each week with the financial director and other directors to discuss ever changing tax issues, which loses time and resources and is unproductive,” he said. “We need to constantly change our IT programs, too, which adds further costs and disruption.”

For wealthy Brazilians, the answer in past years has been to buy luxury goods outside the country. As Benoit Vulliet, Hublot’s regional director for Latin America, observed: “At best you break even, but as Brazilians travel a lot, we get our investment back in Miami and elsewhere.” In fact, a United States International Trade Administration 2015 report noted that Brazil was of “paramount importance” to the country’s tourism strategy, with 92 percent of its Brazilian visitors citing shopping as their top leisure activity. (Sightseeing, in comparison, was cited by 72 percent.)

One of those vacation buyers has been Julio Oliveira, a tax partner at professional services firm PwC Brasil in São Paulo. “I’m a watch guy,” he said. “I used to live in the States, so I started buying them there as they are a lot cheaper.” Now he has about 10 timepieces, including several Breitling models, a silver Ballon Bleu de Cartier and a white Baume & Mercier Capeland watch, which he was wearing the day of the telephone interview.

With the current uncertainty, however, Brazilians are traveling less, and the ones who are buying are buying at home. For example, Carlos Jereissati Filho, president and chief executive of Iguatemi Group, said sales at its upscale malls like JK Iguatemi and Iguatemi São Paulo grew in real terms above inflation during the 2015 Christmas period. (However, the Associação Brasileria de Lojistas de Shopping, the shopping mall owners association best known as Alshop, called the season the worst in 10 years.)

And, Mr. Jereissati Filho added, watches have become vital in developing the local luxury market as they define the most valuable retail space, more so than fashion. “Watch shops are unique. Often there is only one store in Brazil but there will be two or three Prada or Chanel,” he said. “And not so many people can buy a $100,000 watch. The watch shops, which like to be together, bring more people in because they are exclusive.”

Recovery

Economists expect Brazil’s recovery to begin in 2017. Although, Mr. Ramos of Goldman Sachs said, growth will be modest because “Brazil’s infrastructure is poor, with low education, low investment, no free trade, so growth won’t be spectacular like China.”

According to Giovanni Carestia, the Latin American and Caribbean country manager for Vacheron Constantin, which opened a flagship São Paulo boutique in 2015: “Brazil will be in a much stronger position in 10 to 15 years. It is a huge country with a G.D.P. of over 2 trillion euros, which is bigger than Italy and a little below France. Fifteen years ago, it wasn’t even on the map, and today it is the world’s seventh biggest economy.”

Several chief executives of major Swiss brands have clear opinions about Brazil’s future. Angelo Bonati, chief executive of the Richemont brand Panerai, which has been in Brazil since 2000, noted that regional cities such as Salvador, Curitiba and Pôrto Alegre are growing and are richer than before, thanks to their trading port, manufacturing and cattle farming, respectively.

And, raw materials like gold, timber, coffee and hydropower are there and won’t disappear, said Jean-Claude Biver, chief executive of TAG Heuer and president of the LVMH Watch Division.

Some recent moves hint at the future. Take Montblanc, which opened two stores last year, one of them in Brazil’s first outlet shopping destination, Catarina Fashion Outlet, 40 miles north of São Paulo on the busy highway to Sorocaba.

As Alain dos Santos, Montblanc Brazil’s managing director, noted, “We can find newcomers to luxury in a neighborhood with 20 million inhabitants.”