Companies in Latin America face a weak outlook due to low economic growth

Companies in Latin America face a weak outlook due to low economic growth

02/09/2016 source “Cesla”

Companies in Latin America faces a challenging outlook in the remainder of 2016 due to a number of factors as slow economic growth, low commodity prices and political risks, said the qualification agency Fitch in a report released yesterday.

“Throughout Latin America, corporate issuers face opposing forces that are not expected to end before the end of the year”, expressed Jay Djemal, director of the agency, adding that “the only positive points are Mexico and Peru; it is anticipated that both countries enjoy a positive GDP growth that should support its corporate sector”.

Regarding Argentina, Fitch said the outlook for the short term growth will remain weak, as the economy is expected to contract 0,3% in 2016, reflecting the effect of the high cost of public services, the weak exchange rate and of a reduction in the stimulation of official policies.

For its part, Brazil continues to face a significant cash flow crisis with no apparent signs of recovery in 2016. The high political uncertainty, the low commodity prices and the adjusted financial conditions continue to complicate the economic situation and to hamper the credit quality.

Regarding the Chilean economy, Fitch said it is going through a third year of slow activity due in part to low investments brought out by unclear structural reforms promoted by the government and persistent weakness of consumer perceptions about the economy, and by the low prices of commodities like copper.