Moody’s indicated that despite rising costs, exporting countries continue to benefit from higher commodity prices. On their side, companies that are not dedicated to the ‘commodities’ sector are benefiting from the increase in retail activity, which has recovered ground after passing the worst of the pandemic.
The reports prepared by Moody’s Investors Service have specified that in Peru the persistent political tensions will offset the strong benefits of the high prices of raw materials, slowing down the firm’s growth forecasts, while in Argentina macroeconomic imbalances “complicate the scenario for companies.”
“In Argentina, companies face higher refinancing risks than their regional counterparts due to rapidly deteriorating business conditions, restricted access to international capital markets, and tightening capital controls, all of which have made it difficult to debt refinancing in foreign currencythe agency explained. Added to these problems has been a context of tightening international financial conditions following Russia’s invasion of Ukraine.
The risk rating agency also indicated that growth for the country will be more moderate than expected: for 2022 it projects a growth of 2.8% followed by 1.9% for 2023.
“Government limitations on foreign exchange reserves increase adjustment risk,” Moody’s noted.
Regarding the agreement with the IMF, Moody’s acknowledges that it provided foreign exchange for the country to increase reserves, but maintains that it is at risk and non-compliance “by not being able to carry out fiscal adjustments necessary to stay in line with the objectives of the IMF program” .
Source: Ambito
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