Fitch: Stable Outlook with Negative Bias For LatAm Sovereigns in 2014

Thu Dec 12, 2013 10:53am EST

Link to Fitch Ratings' Report: 2014 Outlook: Latin America SovereignsNEW YORK, December 12 (Fitch) Sovereign creditworthiness in Latin America is expected to remain broadly stable in 2014, although some negative bias can be observed in the region's ratings, with six sovereigns on Negative and none on Positive Outlook, said Fitch Ratings in its 2014 Latin American Sovereign Outlook Report. 'Regional GDP growth is expected to recover moderately to 3.1% in 2014 from an estimated 2.6% in 2013, led primarily by a rebound in Mexico,' said Shelly Shetty, Head of Fitch's Latin America Sovereign Group. 'However, weaker growth in China, softer terms of trade, tighter financial conditions and lagging productivity improvements will constrain growth rates to levels below those seen in the past,' 'Potential external shocks continue to represent the region's main downside risks, though strong international reserves, combined with flexible exchange rate regimes and steady foreign direct investment should mitigate these risks,' added Shetty. Growth rates are expected to vary significantly throughout the region. Brazil, Argentina, El Salvador, Jamaica and Venezuela are anticipated to underperform the regional average. Investment-grade Andean countries as well as Bolivia and Paraguay are expected to record above-average growth rates in 2014. Panama, while decelerating, should be the fastest-growing economy in the region. Below-potential economic growth, easing of commodity price pressures and credible monetary regimes should lead inflation to remain well contained in most countries. On the other hand, moderate growth rates and less favorable terms of trade, combined with continued spending pressures and a busy election cycle could pressure fiscal accounts in some countries. Chile and Peru have the maximum fiscal buffers and among the lowest debt burdens in the region which places them in the best position to implement fiscal stimulus, if needed. Despite a heavy election schedule for 2014, a significant departure from current policies is unlikely. As a result, elections should be largely credit-neutral, although they could detract from progress on competitiveness-boosting reforms. Fitch's special report '2014 Outlook: Latin American Sovereigns - Stable Credit Outlook with Negative Bias' is available at 'www.fitchratings.com' or by clicking on the above link. Contact: Shelly Shetty Senior Director +1 212-908-0324 Fitch Ratings, Inc., One State Street Plaza, New York, NY 10004 Erich Arispe Director +1 212-908-9165 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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