Latin America Econ To Grow 0% To 0.7% In 2009 As Crisis Hits
Saturday, March 28 2009 @ 08:53 PM UTC
Contributed by: Don Winner
Both countries depend more on big investment projects, the expansion of the canal for Panama, and mining and gas projects for Peru, he said.
The agency expects Brazil's growth will be around zero-to-0.7%, down from 1.2%, after the country's recent numbers were bad.
Francis expects to downgrade Colombia's economic growth forecast to 1% for 2009, down from a previous 2%, after the Colombian statistics department surprised the market by saying GDP had contracted 0.7% in the fourth quarter of 2008.
Francis said first-quarter growth will probably be negative again and may bottom up in the second quarter.
The Colombian Central Bank's expansive monetary policy and infrastructure projects launched by the government may help that country avoid a recession, so long as execution and financing of those projects are secured.
Declining remittances from Latin Americans living abroad have fallen hard at nations in Central America and the Caribbean. Those remittances had fallen off sharply toward the end of last year and are expected to post even more declines this year, said sovereign analyst Richard Francis, during the same interview.
In terms of ratings, those countries that were in trouble before the crisis will continue to suffer, the analysts said.
Those include nations such as Jamaica, with extremely high debt levels; the Dominican Republic, with weak institutions; Argentina with local factors, and commodity-dependent nations such as Ecuador and Bolivia.
The nations with investment-grade ratings, such as Chile, Mexico, Brazil and Peru, all have stable outlooks. The ratings on those nations aren't expected to decline any time soon, as their structural features remain solid.
Ratings increases in recent years were modest compared with increases in growth, as capital markets have deepened, and in some cases floating exchange rates have helped absorb shocks, among other factors, the analysts noted.