/raid1/www/Hosts/bankrupt/TCRLA_Public/240110.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, January 10, 2024, Vol. 25, No. 8
Headlines
A R G E N T I N A
ARGENTINA: Buyers Shun Reconstruction Bonds for 2nd Straight Week
ARGENTINA: Sees Monthly Inflation in December Around 30%
B R A Z I L
BRAZIL: Investor Caution Marks 2023 FDI Plunge
BRAZIL: Sees Record Low in External Deficits
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Dismisses Prospect of Change in Political Econ.
J A M A I C A
CRAZY JIM: Overcomes Production Challenges Caused by Pandemic
P E R U
RUTAS DE LIMA: S&P Keeps 'B-' Issue Rating on CreditWatch Negative
X X X X X X X X
LATAM: Exports Contract as Trade Opportunities Emerge
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Buyers Shun Reconstruction Bonds for 2nd Straight Week
-----------------------------------------------------------------
Ignacio Olivera Doll & Kevin Simauchi at Bloomberg News report that
the Central Bank's second auction to pay down importers' debts owed
to suppliers abroad saw another batch of disappointing results.
Argentina's Central Bank said it sold just US$57 million out of a
maximum of US$750 million of notes available, according to
Bloomberg News. The fresh setback for the government of Javier
Milei - reported by Bloomberg earlier - follows a similar flop last
week, when the auction saw sales of just US$68 million of the
US$750 million offered, Bloomberg News notes.
The bonds - which importers can buy and resell in the secondary
market to other investors in exchange for US dollars - are key to
helping importers settle some US$30 billion owed to suppliers
abroad and improving the Central Bank's balance sheet, Bloomberg
News relays. The sales are also meant to help Milei wrestle a
chronic dollar shortage and strict capital controls, both of which
have bottlenecked trade, Bloomberg News discloses.
Since taking office in December, Milei has announced a swath of
measures to pull Argentina's economy back from the brink of its
sixth recession in a decade, Bloomberg News notes. The "shock
therapy" package included devaluing the peso by more than 50
percent, along with massive cuts to government spending, Bloomberg
News says.
The sales - which are seen as key for Argentina to eventually unify
its different exchange rates - also come as the government has
about US$1 billion in interest payments to bondholders due soon,
Bloomberg News relays.
The dollar-denominated importer notes are called "Bopreal" - which
stands for "bonds for the reconstruction of a free Argentina" - and
offer a five percent annual interest rate, Bloomberg News
discloses. They can be bought in local currency, which in turn
would help the Central Bank absorb some pesos in the economy in a
bid to ease annual inflation expected to exceed 220 percent in
December, Bloomberg News adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
0its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions within the government coalition, and infighting among the
opposition, constrain the sovereign's ability to implement timely
changes in economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
ARGENTINA: Sees Monthly Inflation in December Around 30%
--------------------------------------------------------
Reuters reports that Argentina's inflation likely hovered around
30% in December, presidential spokesman Manuel Adorni said, when
asked by a reporter about studies showing monthly inflation
reaching nearly that level.
"We still don't have the official data, but we understand that the
figure was around the one you are referring to," Adorni told the
reporter during a press conference, the report notes.
If confirmed, that would take annual inflation in the South
American country to over 200% in 2023, the highest in more than
three decades, the report discloses.
The official figure will only be released on Jan. 11, but local
newspaper Clarin reported earlier this week that consultancies were
estimating the monthly data to come in around 29%, the report
adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
0its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions within the government coalition, and infighting among the
opposition, constrain the sovereign's ability to implement timely
changes in economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
===========
B R A Z I L
===========
BRAZIL: Investor Caution Marks 2023 FDI Plunge
----------------------------------------------
Richard Mann at Rio Times Online reports that in 2023, Brazil's
Foreign Direct Investment (FDI) fell by 35.9%, reaching only $52.7
billion from January to November.
This marks the lowest FDI since 2021's $51.6 billion, according to
Rio Times Online.
Despite a slight increase in November 2023 to $7.8 billion, the
overall 12-month FDI stood at $57.7 billion, just 2.68% of the GDP,
the report notes.
This is a decrease from $77.1 billion in the previous November, the
report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
S&P Global Ratings raised on Dec. 19, 2023, its long-term global
scale ratings on Brazil to 'BB' from 'BB-'. The outlook on the
long-term ratings is stable. S&P affirmed Brazil's global scale
short-term ratings at 'B' and its national scale long-term rating
at 'brAAA'. S&P also raised the transfer and convertibility
assessment on the country to 'BBB-' from 'BB+'. S&P said, "The
stable outlook reflects our expectation that Brazil will maintain a
strong external position, thanks to strong commodity output and
limited external financing needs. We also believe Brazil's
institutional framework can sustain stable and pragmatic
policymaking based on extensive checks and balances across the
executive, legislative, and judicial branches of government. We
expect a very gradual fiscal correction but anticipate fiscal
deficits will remain large."
Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable
Outlook. Fitch said Brazil's ratings are supported by its large and
diverse economy, high per-capita income, and deep domestic markets
and a large cash cushion that support the sovereign's financing
flexibility and its high local-currency debt share. Strong external
finances support resilience to shocks, underpinned by a flexible
exchange rate, robust international reserves and a sovereign net
external creditor position. The ratings are constrained by weak
economic growth potential, relatively low governance scores, high
and rising government debt/GDP, and budgetary rigidities. A new
fiscal framework introduced this year aims to anchor a gradual
consolidation process and address these fiscal weaknesses, but its
effectiveness is increasingly unclear.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS Inc., on August 15, 2023, upgraded Brazil's Long-Term
Foreign and Local Currency - Issuer Ratings to BB from BB (low).
At the same time, DBRS Morningstar confirmed Brazil's
Short-term Foreign and Local Currency - Issuer Ratings at R-4.
The trend on all ratings is Stable (March 2018).
BRAZIL: Sees Record Low in External Deficits
--------------------------------------------
Lachlan Williams at Rio Times Online reports that in November 2023,
Brazil's external accounts registered a $1.6 billion deficit, the
lowest for this month in seven years.
The Central Bank released this data, showing a significant change
from past years, according to Rio Times Online. This decrease
stems from a positive shift in the trade balance, which reached
$6.7 billion, the report notes.
This balance compares the country's exports and imports, the report
relays. Notably, exports fell by 1%, but imports declined more
sharply, by 9.6%. This trend led to a reduced deficit, the report
adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
S&P Global Ratings raised on Dec. 19, 2023, its long-term global
scale ratings on Brazil to 'BB' from 'BB-'. The outlook on the
long-term ratings is stable. S&P affirmed Brazil's global scale
short-term ratings at 'B' and its national scale long-term rating
at 'brAAA'. S&P also raised the transfer and convertibility
assessment on the country to 'BBB-' from 'BB+'. S&P said, "The
stable outlook reflects our expectation that Brazil will maintain a
strong external position, thanks to strong commodity output and
limited external financing needs. We also believe Brazil's
institutional framework can sustain stable and pragmatic
policymaking based on extensive checks and balances across the
executive, legislative, and judicial branches of government. We
expect a very gradual fiscal correction but anticipate fiscal
deficits will remain large."
Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable
Outlook. Fitch said Brazil's ratings are supported by its large and
diverse economy, high per-capita income, and deep domestic markets
and a large cash cushion that support the sovereign's financing
flexibility and its high local-currency debt share. Strong external
finances support resilience to shocks, underpinned by a flexible
exchange rate, robust international reserves and a sovereign net
external creditor position. The ratings are constrained by weak
economic growth potential, relatively low governance scores, high
and rising government debt/GDP, and budgetary rigidities. A new
fiscal framework introduced this year aims to anchor a gradual
consolidation process and address these fiscal weaknesses, but its
effectiveness is increasingly unclear.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS Inc., on August 15, 2023, upgraded Brazil's Long-Term
Foreign and Local Currency - Issuer Ratings to BB from BB (low).
At the same time, DBRS Morningstar confirmed Brazil's
Short-term Foreign and Local Currency - Issuer Ratings at R-4.
The trend on all ratings is Stable (March 2018).
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Dismisses Prospect of Change in Political Econ.
-------------------------------------------------------------------
Dominican Today reports that former governor of the Central Bank,
Guillermo Caram, informed that the dollar had increased the
satisfaction of the demand for imports, thus leading to a
reactivation of the economy.
"This increase in the demand for the dollar is a real manifestation
of the economy that we are satisfying more needs with imports and
forces us to look at how we can reactivate the economy so that
there are more," he explained, according to Dominican Today.
Caram further dismissed expectations of change in the country's
political economy, the report notes.
"The president looks very satisfied with his economic policy in
general, and I do not perceive in the civil service any initiative
for change," he said, the report relays.
He described 2024 as challenging "because we just had moderate
economic growth for the first time in many years, and we are going
for an election year where there is a propensity to spend," the
report notes.
"I see the government accelerating many provisions that had long
been on the table. For example: the issue of advertising, the
regulation of administrative processes, among others," he added,
notes the report.
Regarding Luis Abinader's mandate, the economist believes that the
change from the Partido de la Liberacion Dominicana (PLD) to the
Partido Revolucionario Moderno (PRM) "was worth it," the report
says.
"I supported Abinader in 2012, 2016, 2020 and now I am going to
support him. I think the change was worth it because above all,
what would have happened if Abinader had not won when what we have
seen what is happening in the justice system," he concluded, the
report relays.
These statements were offered in the program Uno + Uno, which is
broadcast on TeleAntillas channel 2, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCR-LA reported in April 2019 that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
On December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, Moody's Investors Service changed the outlook on
the Government of Dominican Republic's ratings to positive from
stable and affirmed the local and foreign-currency long-term issuer
and senior unsecured ratings at Ba3. Moody's said the key drivers
for the outlook change to positive are: (i) sustained high growth
rates have enhanced the scale and wealth levels of the economy; and
(ii) a material decline in the government debt burden coupled with
improved fiscal policy effectiveness will support medium-term debt
sustainability.
The affirmation of the Ba3 ratings balances the Dominican
Republic's strong economic growth dynamics and relatively contained
susceptibility to event risks, with a comparatively weaker fiscal
position, reflecting long-standing credit challenges which include:
(i) a shallow revenue base compared to peers, (ii) weak debt
affordability metrics, and (iii) high exposure to foreign currency
borrowing.
S&P Global Ratings, in December 2022, raised its long-term foreign
and local currency sovereign credit ratings on the Dominican
Republic to 'BB' from 'BB-'. The outlook on the long-term ratings
is stable. S&P affirmed its 'B' short-term sovereign credit
ratings. S&P also revised its transfer and convertibility (T&C)
assessment to 'BBB-' from 'BB+'. The stable outlook reflects S&P's
expectation of continued favorable GDP growth and policy continuity
over the next 12-18 months that will likely stabilize the
government's debt burden.
In February 2023, S&P said its BB ratings reflect the country's
fast-growing and resilient economy. It also incorporates the
country's historical political and social challenges in passing
structural reforms to contain fiscal deficits, despite recent
improvements in the electricity sector. The ratings are constrained
by relatively high debt, a hefty interest burden, and limited
monetary policy flexibility.
=============
J A M A I C A
=============
CRAZY JIM: Overcomes Production Challenges Caused by Pandemic
-------------------------------------------------------------
Codie-Ann Barrett at Jamaica Observer reports that Crazy Jim's
iconic ice cream cake, a cherished delight for Jamaicans, is making
a sweet return to the market, overcoming production challenges
spawned by the pandemic.
In an exclusive interview with the Jamaica Observer, founder and
Chairman James "Jimmy" Smith delves into the hurdles faced by Crazy
Jim's Ice Cream Cake during the pandemic, attributing setbacks to
disruptions in the supply chain triggered by geopolitical issues,
according to Jamaica Observer.
"With the problems in Ukraine and Russia, shipping just threw
everything into chaos," Smith explained, the report relays.
Despite these obstacles, when Smith & Stewart Distributors Limited,
the owner of Crazy Jim, successfully restocked its popular product
just in time for the holiday season, the high demand for the treat
led to a quick sell out, the report notes.
"Ice cream cake is something that just sells; no matter the amount
you produce, it sells," Smith commented, highlighting its enduring
popularity, the report relays.
Founded in 1985, Crazy Jim's has become a household name, but the
recent challenges in sourcing raw materials from suppliers in
Poland caused a slowdown in production, the report recalls. The
increased prices of skim milk powder, a key ingredient, compelled
the company to temporarily reduce production, the report
discloses.
"Something that had cost us $30,000 went up to $60,000 for a
container, and shipping times that were normally six weeks
stretched to two or three months," Smith revealed to the Business
Observer.
Despite these challenges, the company continued to distribute its
sought-after ice cream cake, albeit in reduced quantities, the
report discloses. While specific details about distribution and
production levels remain undisclosed, Smith emphasized the
company's commitment to meeting market demands while boosting the
idea that no matter how much the company produces, it's always a
hit with Jamaicans, the report relays.
"We have never been able to supply the demand for our ice cream
cake. It might be when you want it; it's finished," Smith said.
Plans for the upcoming year include addressing this demand by
increasing production, with a dedicated cold room exclusively for
ice cream cake production, the report relays. Other considerations
are being made for the renovation of Crazy Jim's headquarters on
McArthur Avenue, along with its Waltham Park Road in Kingston
outlets, the report discloses. Looking ahead, Crazy Jim has
committed to maintaining a consistent and steady pace in the
market, the report says.
"We're always thinking about what is new. We're going to grow the
business some more in 2024; that's my objective right now - to
increase our volume of all the products," Smith expressed with
optimism, the report adds.
=======
P E R U
=======
RUTAS DE LIMA: S&P Keeps 'B-' Issue Rating on CreditWatch Negative
------------------------------------------------------------------
On Jan. 8, 2024, S&P Global Ratings kept its 'B-' issue rating on
Rutas de Lima S.A.C. (RdL or the project) on CreditWatch with
negative implications. S&P initially placed the rating on
CreditWatch on Feb. 10, 2023.
S&P said, "The CreditWatch negative reflects a 50% chance that we
could lower the rating in the short term if we do not see an
improvement in our projected DSCR for the year to 1x or above,
fueled by either a toll adjustment or traffic levels improving more
than we expect. Moreover, we could lower the rating if the Court of
Arbitration issues a final judgment against the project on the
concession termination dispute, further deteriorating the project's
credit metrics."
S&P Global Ratings
Between January and November 2023, RdL's traffic decreased 2.6%
versus the same period in 2022, which is below S&P's previous
assumption of no traffic growth. This was mainly due to the
protests in Lima at the beginning of the year, when roads where
temporarily blocked, and to the severe El Nino during the second
half of the year, which hampered economic growth in Peru and,
consequently, the project's traffic volume.
S&P said, "Based on the last report from the Peruvian Multisectoral
Commission in charge of the National Study of the El Niño
Phenomenon, we expect El Niño to continue hurting the Peruvian
economy in 2024. For that reason, we now assume RdL's traffic in
2024 will remain at the same level as 2023. Absent any toll
increase, we project that would lower the DSCR to 0.7x-0.8x in
December 2024, below our previous forecast of 1.2x-1.3x. The
project would need to use reserves to pay interest, which over
time, could lead us to lower the rating to 'CCC'.
"According to the trust agreement, RdL could default if it fails to
finalize pending works at PS or PN toll roads by a specified date.
On Dec. 27, 2023, the bondholders agreed to extend that date until
June 30, 2025. While this reduces debt acceleration risk for the
project in the short and medium term, we don't think this is enough
time for RdL to finish the pending works. The MML still needs to
acquire and transfer the property land rights to RdL, and once this
occurs, we expect the construction to take one to two years."
All the legal disputes that RdL has had with the MML in the past
(regarding the suspension of toll collections and the opposition to
tariff increases) have resolved in favor of the project, which sets
a good precedent for RdL. However, if the court rules against the
project on the concession termination dispute, RdL would be exposed
to a nonautomatic event of default, hence its debt could eventually
accelerate. Based on the track record of international arbitration
processes between the two parties, S&P expects the court's final
decision to be made in the first half of 2025.
===============
X X X X X X X X
===============
LATAM: Exports Contract as Trade Opportunities Emerge
-----------------------------------------------------
The value of goods exports from Latin America and the Caribbean
fell by 2.7% year-on-year in the first half of 2023 after expanding
17% in 2022, marking the end of the post-Covid recovery, according
to a new report by the Inter-American Development Bank (IDB).
The decline is due to falling prices and lower growth in export
volumes.
During the same period, world trade went from 11.9% growth to a 5%
year-on-year decline. The deterioration in the global trade
environment is due to several shocks, including geopolitical
conflicts, monetary tightening, more frequent adverse weather
events, and slower global economic growth.
According to the latest edition of the annual Trade and Integration
Monitor, projections for the rest of the year confirm the
consolidation of the contractionary trend for exports.
The report finds that growth of services exports from Latin America
and the Caribbean slowed slightly in the first quarter of 2023,
reaching 27.8%, compared to 37.7% in 2022. However, they continued
to grow faster than the global average (1.3%).
"Once the post-Covid recovery faded, the region's exports weakened
faster than expected. However, this challenging new scenario also
comes with opportunities. Specifically, Latin America and the
Caribbean has the potential to boost exports and contribute to
global food security if the region implements policies to rebuild
the competitiveness of the agricultural sector," said Paolo
Giordano, Principal Economist at the IDB's Integration and Trade
Sector, who coordinated the report.
After climbing by 8.8% in 2022, the region's export prices fell by
4.7% year-on-year in the first half of 2023, while export volumes
grew by 2.9%.
Although volume growth was above the global average (-1.3%), it was
lower than the previous year and concentrated in a handful of Latin
American and Caribbean economies. Import prices fell by 1.5%, less
than export prices, causing the region's terms of trade and trade
balances to deteriorate.
The report notes that goods exports to every destination market
fell. However, the decline of intraregional sales (-0.6%) was less
than that of extraregional sales (-2.2%), and the share of
intraregional trade increased to 15.2%.
The report concludes that Latin America and the Caribbean is facing
a challenging external environment marked by less dynamic demand,
greater geopolitical fragmentation, more active industrial policies
among global competitors, and new regulatory requirements dictated
by the climate agenda.
As the world's leading net exporter of agricultural products, the
region has an opportunity to expand supply and contribute to global
food security.
To make the most of this potential, governments need to work
alongside the private sector to increase productivity and regain
competitiveness through integrated public policies that address
multiple objectives and help find a way around the trade-off
between increasing production and reducing the impact on the
environment and climate change.
The Trade and Integration Monitor was prepared by the IDB's
Integration and Trade Sector and its Institute for the Integration
of Latin America and the Caribbean (INTAL).
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
.
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