U.S. Markets closed

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

Link to Fitch Ratings' Report: Risk Radar - Latam 3Q13NEW YORK, October 16 (Fitch) Slow growth stemming from US political polarization and sluggish growth in China are the main risks facing Latin America's larger economies, according to Fitch Ratings' LatAm Risk Radar. "The risks associated with the US political stalemate and the slowdown in China are affecting economies around the world - not just Latin America," said Peter Shaw, Regional Credit Officer for Latin America. "Continued wrangling over the debt ceiling and other fiscal issues risks derailing the modest recovery in the US, and the scenario of a material slowdown in China has become somewhat more urgent given Latin America's reliance on commodity trade." Foreign funding risks have been highlighted by the recent increase in risk aversion and volatility in international capital markets in light of the prospect of tapering of asset purchases by developed central banks and the accompanying risk of policy mistakes. Credit growth remains in double digits in many of Latin America'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 interest rates and longer tenors. Inflation risk has abated in most of the region, except Brazil. Monetary easing has already occurred in some countries and counter-cyclical policies can be employed to varying degrees if external conditions deteriorate and the deceleration in regional economies gathers pace. Government interference continues to muddy the outlook and operating environment in several lowly rated countries, most notably in Argentina and Venezuela and, to a lesser extent, Brazil. The report, "LatAm Risk Radar 2013", is available on www.fitchratings.com.">www.fitchratings.com. Contact: Peter Shaw Regional Credit Officer, Latin America Credit Policy Group +1-212-908-0553 One State Street Plaza New York, NY 10004 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, 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 AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.