The rating agency Moody’s said on Thursday that by 2019 it expects economic stability in Latin America with moderate growth, but also more restrictive credit conditions, something that will affect private enterprise.
In a report on perspectives for next year disclosed today, Moody’s said that in Latin America there will be “greater risks as global interest rates rise, volatility continues and international trade frictions develop.
“Latin American companies will face more restrictive credit conditions next year, despite an expectation of moderate but stable growth,” he said.
The rating agency predicted economic growth for the largest economies in Latin America, “except for Argentina,” which will benefit private companies despite the credit restriction caused by the increase in interest rates and the volatility of capital flows.
“Commodity prices will remain at more stable levels, supporting the cash generation of the companies,” Moody’s Managing Director Marianna Waltz predicted.
The rating agency warned that difficult global conditions could increase financing costs in Latin America, affecting the performance of some industries.
However, he predicted that most companies will benefit from solid balance sheets and stable domestic growth, and default rates will be lower than those in other regions.
“There will still be political risks as the new governments take over in Mexico and Brazil, while Argentina is preparing for its presidential election amid a difficult economic outlook,” he added.
Regarding Brazil, Moody’s said that “the signal of continuity of the new government has improved market sentiment and reduced exchange volatility”, despite the question about “the exact direction of the economic policy of the new administration.”
Of Mexico, he warned that “a lower predictability of public policies can damage investor confidence and exacerbate the negative investment dynamics.”
On Latin American agricultural exporters, said they may benefit from greater demand from China, but anticipated that mining companies may be affected by price volatility and a “demand under pressure.”