The perspectives of the risk rating agency Moody’s for Latin America they are negative due to the lower growth expected and higher financing costs that will be a challenge for domestic politics, according to what one of its representatives said this Thursday at the CIO Summit LatAm Edition.
(Moodys highlights the strength of the economy in the face of the new government).
For his part, the vice president and senior credit officer of the sovereign risk group of the rating agency, Jaime Reusche, detailed as negative aspects, higher borrowing costs, less fiscal space anticipated fiscal deficits returning to pre-pandemic levels, weak investment prospects, persistent social tensions, and slow economic growth.
Additionally, the vice president recognized limited exposure to geopolitical tensions and relatively stable debt dynamics as positive factors.
(Risk rating agency Moody’s will stop measuring Twitter).
“Governments will be forced to learn to do more with less”, Reusche warned about the efficiency of public spending in a context of social demands due to increases in food and energy prices. However, within the framework of the CIO Summit LatAm Edition, which was held virtually, Moody’s anticipated that global debt default rates will increase above the long-term average rates, which are currently located at 4% in 2023, doubling compared to 2022 and positioning itself at 5%.
However, according to estimates, they will not reach the double digits that they registered, for example, in the financial crisis of 2008-2009, with 13.5%.
(Moody’s downgrades debt from El Salvador, a country where bitcoin is legal.)
For Latin AmericaAlthough Moody’s forecasts an increase in the debt default rate in 2023, it does not expect it to reach the peak of the covid-19 pandemic.
According to the general director and global head of Strategy and Research at Moody’s, Atsi Sheth, the rating agency estimates that the countries of the world will still have to deal with economic growth that is lower than in 2022 and that inflation will continue to be high, as well as Interest rates.
EFE
