Roundup: IMF Argentina forecast, Moody's debt issuance report

The IMF forecast this week that economic activity in Latin America will recover gradually in 2017-18 as Argentina and Brazil return to health.

The region's economy is expected to expand 1% but "amid low confidence, domestic demand continues to remain weak across most economies, and is expected to only recover slowly as actual output catches up to potential and internal sources of growth build strength [sic], based on a decline in political and policy uncertainty across some major economies," Alejandro Werner, director of the IMF's western hemisphere department, wrote in a blog on the forecast.

He also discussed country-level GDP figures for Argentina, among others.

Argentina's economy is expected to expand 2.4% this year, up slightly from April's forecast, and moderate to about 2.25% in 2018.

"In Argentina, the recovery from last year's recession is firming up, as private consumption benefits from a gradual pick-up in real wages, and investment is supported by incipient credit growth and greater spending on public works," Werner wrote.

Forecast GDP growth in Brazil for this year has been revised up 0.1pp to 0.3%. But the region's biggest economy is now expected to expand 1.3% in 2018 compared with an April forecast of 1.7%.

See the blog for further details, on Chile, Peru, Colombia and Venezuela.

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High-yield issuance accelerated in Latin America in Q2, rating agency Moody's said in a report.

Seven companies issued US$6.3bn in rated debt in the period, with Brazilian state oil company Petrobras accounting for 64% of the total.

According to the report, which looks at non-financial corporates, refinancing-related activity represented 94% of new issuance volume. Just 2% was targeted at capex.

"Weak industry fundamentals continue to constrain investment-related issuance," the report said.

Marianna Waltz, managing director, corporate finance at Moody's told BNamericas last month that most companies in Latin America, particularly more conservative firms, are still in "savings mode" and are focused on strengthening their balance sheets.