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Investor alert: Moody’s dismal forecast for Latin American economies

Investor alert: Moody’s dismal forecast for Latin American economies
Investor alert: Moody’s dismal forecast for Latin American economies

Latin America is the region where growth prospects are weakest due to the fact that the recovery of China and the United States will affect these emerging countries, according to the credit risk rating agency, Moodys.

In the report it was noted that “China will drive the recovery, but the outlook differs markedly between regions.”

The work argues that The contribution of the Asian giant and the United States will be key in this processalthough he clarified that “the differences between the emerging regions will become more pronounced.”

In that sense, he noted that “Asia will continue to lead in growth, while Latin America and Africa will lag behind.”

In turn, he warned that “the debt crisis in the smaller emerging economies persists and is a source of risk.”

For the consultant, “the rise in the prices of raw materials after Russia’s military invasion of Ukraine was positive for the main Latin American economies, but bottlenecks in supply chains and poor harvests prevented exporters of energy, mining and agricultural commodities from producing and exporting more“.

In this scenario, he evaluated that “rising food and energy prices hurt more than helped, driving up domestic inflation and prompting even more aggressive rate tightening.”

Moody’s maintained that, as a result of “the highest real short-term interest rates in more than a decade, consumer spending decreased with large corrections in Chile and Colombia and more modest but notable falls in Mexico, Brazil, Peru and Argentina”.

Likewise, he maintained that “Latin America will be favored this year by the rebound in China, but reasonably high commodity prices won’t save the day because a decade of insufficient investment puts limits on what the region can export”.

Source: Ambito

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