2014 Economic Predictions Say Latin America Is in an Upswing
January 10, 2014 Leave a comment
With the New Year officially here, market analysts and economists are in full “prediction mode,” working hard to determine which economies will do better, worse, or about the same as they did in 2013. One area of the world that’s garnering a lot of attention in Latin America, where analysts say things look generally positive despite some instability.
Though economic growth actually declined last year, the UN’s 2014 World Economic Situations and Prospects report predicts that better economic growth is in store for 2014. An upswing in private consumption and manufacturing will prompt growth. And if that happens, this may be an ideal time to invest in those economies.
“It’s an ideal opportunity,” said Geoffrey Dennis, who is the head of global emerging markets strategy at UBS. “People are saying ‘It was a terrible year in 2013, it has to be better in 2014.” Indeed, the recent economic slump means buying is cheaper than normal—and will pay off if, indeed, the economies in question do see better times in 2014.
But this new positive outlook for Latin American economies does not come without several grains of salt. Brazil, for example, is facing a potential credit rating drop. Ray McDaniel-run ratings agency Moody’s says the country needs to get its debt under control and see stronger economic growth to keep its Baa2 investment grade rating
“The path debt-to-GDP takes will strongly influence Brazil’s sovereign credit outlook,” Moody’s wrote, noting that it is concerned with the trends that take form this year. “An important question to sovereign credit quality is whether authorities can restore conditions that will eventually lead to a declining trend in the debt ratio.” Indeed with the country’s upcoming elections, there may be changes to Brazil’s economic policies—whether for better or worse.
What predictions do you have for the coming year?