BOGOTA (Reuters) – Non-financial industry companies in Latin America are facing a negative outlook for next year because of continued high interest rates, slow regional economic growth and projected low prices for commodities because of a deceleration in China, Moody’s said on Wednesday.
The ratings agency said that though credit conditions for Latin American companies will be better in 2024 than during this year, uneven growth and still-high debt costs will affect spending, investment and employment.
“Strict financial conditions will continue until the market uncertainty in regards to the path of U.S. rates dissipates, which will limit financing options, especially for the more than two-thirds of corporate issuers who have a speculative grade,” Moody’s said in a report.
The El Nino climate phenomenon will last until at least mid-2024 and contribute to price instability for agricultural, metallurgical and mining raw materials and operative disruptions in much of the region, it added.
Mexico will benefit from nearshoring efforts and higher activity in the automotive, real estate and communications sectors, but the mining industry is at risk of government intervention, Moody’s said.
A vote in Chile on Sunday on whether to approve a new constitution could raise financial volatility for its neighbor Argentina, Moody’s said, though the ratings agency did not explain how.
In Colombia, policies centered on decarbonization and energy distribution could reduce investment, despite solid institutions, Moody’s said.
(Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Jonathan Oatis)