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Moody's - Pandemic-induced recession lowers remittances to Latin America and the Caribbean

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<p style="position:absolute;top:155px;left:108px;white-space:nowrap" class="ft00"><b>Research Announcement:&#160;</b></p>

<p style="position:absolute;top:155px;left:364px;white-space:nowrap" class="ft01"><b>Moody's - Pandemic-induced recession</b></p>

<p style="position:absolute;top:180px;left:108px;white-space:nowrap" class="ft01"><b>lowers remittances to Latin America and the Caribbean</b></p>

<p style="position:absolute;top:216px;left:108px;white-space:nowrap" class="ft02">Mexico, September 02, 2020 --</p>

<p style="position:absolute;top:246px;left:108px;white-space:nowrap" class="ft03">»&#160;Severe impact of the pandemic on US' Latino labor market risks a prolonged recovery in</p>

<p style="position:absolute;top:266px;left:127px;white-space:nowrap" class="ft03">remittances, the pullback will exacerbate recessions in Latin America and the Caribbean</p>

<p style="position:absolute;top:296px;left:108px;white-space:nowrap" class="ft03">»&#160;Remittances recovery will depend on US income support measures as well as the legal status</p>

<p style="position:absolute;top:316px;left:127px;white-space:nowrap" class="ft03">and education levels of migrant diasporas</p>

<p style="position:absolute;top:351px;left:108px;white-space:nowrap" class="ft02">About 75% of remittances going to Latin America and the Caribbean (LAC) come from the US, which</p>

<p style="position:absolute;top:371px;left:108px;white-space:nowrap" class="ft02">is undergoing its worst recession since the Great Depression. The pandemic-induced recession</p>

<p style="position:absolute;top:390px;left:108px;white-space:nowrap" class="ft02">is having a disproportionately negative impact on the US' Latino labor market, half of which is</p>

<p style="position:absolute;top:410px;left:108px;white-space:nowrap" class="ft02">foreign-born and heavily employed in the services sector. In a new report, Moody’s Investors Service</p>

<p style="position:absolute;top:429px;left:108px;white-space:nowrap" class="ft02">examines the impact of lower remittances on growth and external positions in LAC as well as the</p>

<p style="position:absolute;top:449px;left:108px;white-space:nowrap" class="ft05">prospects for a recovery in US remittances to the region.<br/>Although extraordinary unemployment benefits coming from the US government have helped to</p>

<p style="position:absolute;top:499px;left:108px;white-space:nowrap" class="ft02">temporarily preserve incomes, Moody’s projects total remittances to LAC will decline by about 4%</p>

<p style="position:absolute;top:518px;left:108px;white-space:nowrap" class="ft02">this year − country experiences will vary significantly −as foreign-born Latinos and their Caribbean</p>

<p style="position:absolute;top:538px;left:108px;white-space:nowrap" class="ft05">counterparts cope with higher unemployment.<br/>“In LAC, Central America and the Caribbean are the most economically vulnerable to the decline in</p>

<p style="position:absolute;top:587px;left:108px;white-space:nowrap" class="ft02">remittance inflows,” says Moody’s associate analyst Gabriel Agostini. “Mexico is the region’s largest</p>

<p style="position:absolute;top:607px;left:108px;white-space:nowrap" class="ft02">recipient with nearly $40 billion in remittances last year. While remittance inflows to Central America</p>

<p style="position:absolute;top:626px;left:108px;white-space:nowrap" class="ft02">and the Caribbean are nominally smaller, they are substantially higher in relative terms representing</p>

<p style="position:absolute;top:646px;left:108px;white-space:nowrap" class="ft05">nearly 10% of GDP for each region,” Agostini continued.<br/>After reaching 19.3% in April, well above the 14.7% national average, Latino unemployment is likely</p>

<p style="position:absolute;top:696px;left:108px;white-space:nowrap" class="ft02">to remain stubbornly high. Elevated unemployment limits prospects for improved remittance flows</p>

<p style="position:absolute;top:715px;left:108px;white-space:nowrap" class="ft02">in the near future which will depend on the US’ economic growth and the income support measures</p>

<p style="position:absolute;top:735px;left:108px;white-space:nowrap" class="ft02">that played a pivotal role in replacing lost income this year. Additionally, LAC immigrants' legal</p>

<p style="position:absolute;top:754px;left:108px;white-space:nowrap" class="ft02">authorization in the US and the education credentials will also influence the speed of recovery in</p>

<p style="position:absolute;top:774px;left:108px;white-space:nowrap" class="ft05">remittances.<br/>If the US government resumes unemployment benefits, or if the development of an effective</p>

<p style="position:absolute;top:823px;left:108px;white-space:nowrap" class="ft02">coronavirus vaccine allows for a quicker US economic recovery, we would expect remittance flows to</p>

<p style="position:absolute;top:843px;left:108px;white-space:nowrap" class="ft05">more quickly return to pre-pandemic levels.<br/>The report also quantifies the impact on remittances under an alternative scenario that contemplates</p>

<p style="position:absolute;top:893px;left:108px;white-space:nowrap" class="ft02">prolonged pandemic and a delay in the US government extending income support measures. Under</p>

<p style="position:absolute;top:912px;left:108px;white-space:nowrap" class="ft05">this downside scenario, US remittances to LAC countries could fall by 10% relative to last year.<br/>Subscribers can access the report at:&#160;</p>

<p style="position:absolute;top:943px;left:372px;white-space:nowrap" class="ft04">http://www.moodys.com/researchdocumentcontentpage.aspx?</p>

<p style="position:absolute;top:962px;left:108px;white-space:nowrap" class="ft04">docid=PBC_1232424</p>

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<p style="position:absolute;top:114px;left:108px;white-space:nowrap" class="ft02">by law cannot be excluded) on the part of, or any contingency within or beyond the control of,</p>

<p style="position:absolute;top:133px;left:108px;white-space:nowrap" class="ft02">MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers,</p>

<p style="position:absolute;top:153px;left:108px;white-space:nowrap" class="ft02">arising from or in connection with the information contained herein or the use of or inability to use</p>

<p style="position:absolute;top:172px;left:108px;white-space:nowrap" class="ft06">any such information.<br/>NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS,</p>

<p style="position:absolute;top:215px;left:108px;white-space:nowrap" class="ft02">COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF</p>

<p style="position:absolute;top:234px;left:108px;white-space:nowrap" class="ft02">ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE</p>

<p style="position:absolute;top:254px;left:108px;white-space:nowrap" class="ft06">BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.<br/>Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s</p>

<p style="position:absolute;top:296px;left:108px;white-space:nowrap" class="ft02">Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and</p>

<p style="position:absolute;top:316px;left:108px;white-space:nowrap" class="ft02">municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s</p>

<p style="position:absolute;top:335px;left:108px;white-space:nowrap" class="ft02">Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s</p>

<p style="position:absolute;top:355px;left:108px;white-space:nowrap" class="ft02">Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from</p>

<p style="position:absolute;top:374px;left:108px;white-space:nowrap" class="ft02">$1,000 to approximately $2,700,000. MCO and Moody’s Investors Service also maintain policies</p>

<p style="position:absolute;top:394px;left:108px;white-space:nowrap" class="ft02">and procedures to address the independence of Moody’s Investors Service credit ratings and credit</p>

<p style="position:absolute;top:413px;left:108px;white-space:nowrap" class="ft02">rating processes. Information regarding certain affiliations that may exist between directors of MCO</p>

<p style="position:absolute;top:433px;left:108px;white-space:nowrap" class="ft02">and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and</p>

<p style="position:absolute;top:452px;left:108px;white-space:nowrap" class="ft02">have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted</p>

<p style="position:absolute;top:472px;left:108px;white-space:nowrap" class="ft02">annually at&#160;</p>

<p style="position:absolute;top:472px;left:188px;white-space:nowrap" class="ft04">www.moodys.com</p>

<p style="position:absolute;top:472px;left:315px;white-space:nowrap" class="ft02">&#160;under the heading “Investor Relations — Corporate Governance —</p>

<p style="position:absolute;top:491px;left:108px;white-space:nowrap" class="ft06">Director and Shareholder Affiliation Policy.”<br/>Additional terms for Australia only: Any publication into Australia of this document is pursuant to the</p>

<p style="position:absolute;top:534px;left:108px;white-space:nowrap" class="ft02">Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited</p>

<p style="position:absolute;top:553px;left:108px;white-space:nowrap" class="ft02">ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136</p>

<p style="position:absolute;top:573px;left:108px;white-space:nowrap" class="ft02">972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale</p>

<p style="position:absolute;top:592px;left:108px;white-space:nowrap" class="ft02">clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access</p>

<p style="position:absolute;top:612px;left:108px;white-space:nowrap" class="ft02">this document from within Australia, you represent to MOODY’S that you are, or are accessing</p>

<p style="position:absolute;top:631px;left:108px;white-space:nowrap" class="ft02">the document as a representative of, a “wholesale client” and that neither you nor the entity you</p>

<p style="position:absolute;top:651px;left:108px;white-space:nowrap" class="ft02">represent will directly or indirectly disseminate this document or its contents to “retail clients” within</p>

<p style="position:absolute;top:670px;left:108px;white-space:nowrap" class="ft02">the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as</p>

<p style="position:absolute;top:690px;left:108px;white-space:nowrap" class="ft02">to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or</p>

<p style="position:absolute;top:709px;left:108px;white-space:nowrap" class="ft06">any form of security that is available to retail investors.<br/>Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency</p>

<p style="position:absolute;top:752px;left:108px;white-space:nowrap" class="ft02">subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc.,</p>

<p style="position:absolute;top:771px;left:108px;white-space:nowrap" class="ft02">a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating</p>

<p style="position:absolute;top:791px;left:108px;white-space:nowrap" class="ft02">agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization</p>

<p style="position:absolute;top:810px;left:108px;white-space:nowrap" class="ft02">(“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-</p>

<p style="position:absolute;top:830px;left:108px;white-space:nowrap" class="ft02">NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated</p>

<p style="position:absolute;top:849px;left:108px;white-space:nowrap" class="ft02">obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit</p>

<p style="position:absolute;top:869px;left:108px;white-space:nowrap" class="ft02">rating agencies registered with the Japan Financial Services Agency and their registration numbers</p>

<p style="position:absolute;top:888px;left:108px;white-space:nowrap" class="ft06">are FSA Commissioner (Ratings) No. 2 and 3 respectively.<br/>MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including</p>

<p style="position:absolute;top:931px;left:108px;white-space:nowrap" class="ft02">corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated</p>

<p style="position:absolute;top:950px;left:108px;white-space:nowrap" class="ft02">by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to</p>

<p style="position:absolute;top:970px;left:108px;white-space:nowrap" class="ft02">MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging</p>

<p style="position:absolute;top:989px;left:108px;white-space:nowrap" class="ft06">from JPY125,000 to approximately JPY250,000,000.<br/>MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory</p>

<p style="position:absolute;top:1032px;left:108px;white-space:nowrap" class="ft02">requirements.</p>

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