Fitch: Latin America on a cyclical recovery in 2018

Tuesday, April 10, 2018

Press Release by Fitch

Link to Fitch Ratings' Report: Latin American Sovereign Overview 2Q18

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Fitch Ratings-New York-09 April 2018: In its 'Latin American Sovereign Overview 2Q18', Fitch Ratings projects a modest cyclical recovery in regional GDP (excluding Venezuela) of 2.6% in 2018, up from 1.7% in 2017, thanks to some recovery in commodity prices, better external demand, and improving domestic demand dynamics. However, structural hindrances may restrain growth below prior peaks.

Modest growth in commodity-producing countries highlights persisting challenges in terms of productivity and economic diversification. Moreover, the lack of substantive progress on measures to hasten fiscal consolidation and/or boost growth potential means that downside risks to the economic and fiscal outlooks remain present. The government debt burden is still increasing in several countries.

Slow growth, corruption, legislative gridlocks, and in some cases a rise in crime have frustrated voters in many countries. As a result, anti-establishment candidates are doing well in the polls in some countries (e.g. Mexico and Brazil). In the coming months, Fitch will be monitoring the elections in Brazil, Colombia, Mexico, Paraguay, and Venezuela to assess their implications for economic policies and sovereign creditworthiness.

The Rating Outlooks for most countries in Latin America are currently Stable, while three are Positive (Argentina, Jamaica, and Paraguay) and two are Negative (Costa Rica and Ecuador).

Fitch recently downgraded Brazil's ratings with a Stable Outlook. Venezuela remains in Restricted Default. Other negative actions since our last Latin American Sovereign Overview include the revision of the Outlook on Costa Rica to Negative from Stable. Positive actions include the revision of Suriname's Outlook to Stable from Negative.

The full report 'Latin American Sovereign Overview' provides a summary of the credit

profile of each of the 20 rated sovereigns in Latin America and the Caribbean, as well as an overview of recent macroeconomic developments and rating trends. The report is available at or by clicking the link above.