Moody's sees a stable credit outlook in Latin America

Moody's sees a stable credit outlook in Latin America



Rating agency Moody's announced today that it expects a stable credit outlook for the countries of Latin America and the Caribbean, but warned of the "growing political risks" facing the region.

In its new report on economic conditions in Latin America and the Caribbean, the rating agency noted that this year "slightly higher economic growth is expected" in relation to 2018, while the debt structures are favorable.

"Our stable outlook reflects still favorable economic growth, better debt structures that mitigate liquidity risks and moderate balance of payments risks," said Ariane Ortiz-Bolin, deputy vice president of Moody's.

On the risks for the credit prospects, the analyst of the rating agency said that most "arise from internal challenges arising from changes in economic policies motivated by considerations of a political nature" after electoral processes.

Internal factors will be more significant for the credit prospects of Latin American countries in 2019 than the slowdown in global growth, according to the analysis.

Moody's, however, anticipates that the economic growth conditions of the countries "will continue to be favorable".

The rating agency also stated that while the sovereign debt burden of Latin American countries remains high, which limits the possibility of improving ratings, vulnerabilities to a worsening of external financing conditions are moderate.

The reason for this, he added, are the better debt structures and a relatively low dependence on external capital inflows into the region.

In the short term, political conditions could lead to a change in economic policy priorities and affect confidence and financing conditions, which would affect fiscal performance and economic growth, according to Moody's.

In a previous report, a month ago, the rating agency said it expects economic stability in Latin America by 2019, with moderate growth and more restrictive credit conditions that may affect private enterprise.

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