Monday, December 6

Economic growth and debt stabilization guarantee a “stable” outlook for Latin America in 2022, says Moody’s

The main economies of Latin America will have moderate economic growth in 2022, and their Gross domestic product (GDP) will return to pre-pandemic levels of coronavirus (COVID-19), while fiscal deficits will decrease and debt levels will gradually stabilize, although social risks will persist, revealed a report on the region’s economic expectations issued by the risk rating agency Moody’s Investors Service (Moody’s.)

The perspective “stable”, Says Moody’s, reflects the balance of a relatively rapid economic recovery and debt stabilization in a context of increasing political risks, and represents a favorable change from the negative outlook in 2021.

“After a strong recovery in 2021, we expect more moderate economic growth rates in the main Latin American economies for next year, with the level of GDP in most countries reaching levels similar to those observed before the pandemic in 2022 “, it states Samar Maziad, vice president of Moody’s.

We project a reduction in fiscal deficits and a gradual stabilization of debt ratios while the fiscal measures implemented to counteract the effects of the pandemic and improve the performance of government revenues are being withdrawn, ”he added.

Despite a marked increase in debt in most sovereigns in the region, Moody’s expects the interest burden to remain at levels similar to those seen before the pandemic of COVID-19.

The exceptions will correspond only to countries that face high short-term financial pressures, or strong fiscal imbalances.

Nevertheless, Moody’s warns that the pandemic of COVID-19 It has increased social tensions and political risks in the region, generating pressures that will complicate fiscal management and, therefore, countries that have extensive social safety nets and adopt more effective public policies will be better positioned to manage these conditions and address effectively the challenges that come their way.

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