Special Report
Latin America’s Economic Rebound and Deficit Reduction Does Not Remove Medium-Term Risks (Outlining and enacting credible medium-term plans to improve public finances and debt trajectories is still key to sovereign ratings)
Wed 30 Jun, 2021 - 3:40 PM ET
ֳ’ updated GDP forecasts for Latin America show a faster recovery from the Covid-19 pandemic-driven contraction in 2020 than ֳ had anticipated. Economic recovery, higher commodity prices and in some cases withdrawal of fiscal support from last year will lead to a reduction in fiscal deficits in all but four of the 19 ֳ-rated Latin American sovereigns. However, a faster-than-expected economic rebound and cyclical deficit reduction will not eliminate downward pressures on sovereign ratings in the region. In several cases, this would require greater clarity on credible plans to improve public finances and public debt trajectories, and/or certainty that these plans can be effectively implemented.