Fitch: US Political Polarization and China Slowdown Main Risks for Latam

Reuters

Link to Fitch Ratings' Report: Risk Radar - Latam 3Q13NEW YORK, October 16 (Fitch) Slow growth stemming from USpolitical polarization and sluggish growth in China are the main risks facing LatinAmerica's larger economies, according to Fitch Ratings' LatAm Risk Radar."The risks associated with the US political stalemate and theslowdown in China are affecting economies around the world - not just LatinAmerica," said Peter Shaw, Regional Credit Officer for Latin America. "Continued wrangling over the debt ceiling and other fiscalissues risks derailing the modest recovery in the US, and the scenario of amaterial slowdown in China has become somewhat more urgent given Latin America'sreliance on commodity trade."Foreign funding risks have been highlighted by the recentincrease in risk aversion and volatility in international capital markets inlight of the prospect of tapering of asset purchases by developed centralbanks and the accompanying risk of policy mistakes. Credit growth remains in double digits in many of LatinAmerica's economies, though it slowed in 2013, matching slower economic growth.Sustained credit growth has resulted in a steady rise in consumer indebtedness,although debt service pressures are a bit less largely due to lower interestrates and longer tenors.Inflation risk has abated in most of the region, except Brazil.Monetary easing has already occurred in some countries and counter-cyclicalpolicies can be employed to varying degrees if external conditions deteriorateand the deceleration in regional economies gathers pace.Government interference continues to muddy the outlook andoperating environment in several lowly rated countries, most notably in Argentina andVenezuela and, to a lesser extent, Brazil. The report, "LatAm Risk Radar 2013", is available onwww.fitchratings.com.">www.fitchratings.com.Contact:Peter ShawRegional Credit Officer, Latin AmericaCredit Policy Group+1-212-908-0553One State Street PlazaNew York, NY 10004Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 9080526, Email: elizabeth.fogerty@fitchratings.com.Additional information is available at www.fitchratings.com.">www.fitchratings.com.ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS ANDDISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THISLINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION,RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLEON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'SCODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATEFIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLEFROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHERPERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN ANEU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUERON THE FITCH WEBSITE.

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