Winter 2016
Global Economics
Latin America
Regional Outlook

Regional Growth Divergence | North-South Divide + China’s Deceleration + Southern Revival Delayed

Challenging Commodity Markets | Oil Price Shock + Terms of Trade Erosion + External/Fiscal Adjustment

US Dollar Strength | Defensive Emerging Markets + Uneven Currency Realignment + BRIC in Focus

Uneven Monetary Dynamics | Divergent Inflation Forces + Intensified Intervention + Local Capital Flows

Global Risk Re-Pricing | Escalating China Stress + US Fed Risk Activated + Credit Differentiation 
Governance & Integration | Mexico Reform Process + Pacific Alliance/TPP + Brazil Isolationism Revisited
Table of Contents
Executive Summary ........................................................................ 2
Brazil ............................................................................................... 3
Mexico............................................................................................. 4
Colombia ......................................................................................... 5
Chile ................................................................................................ 6
Peru ................................................................................................ 7
Uruguay .......................................................................................... 8
Key Economic Indicators................................................................. 9
Macroeconomic Metrics ................................................................ 10
Financial Market Metrics ............................................................... 11
Foreign Currency Long Term Sovereign Credit Ratings ............... 12
Latin America Regional Outlook is available on scotiabank.com and Bloomberg at SCOT
Winter 2016
Global Economics
Latin America
Regional Outlook
Executive Summary
Pablo F.G. Bréard 1.416.862.3876
pablo.breard@scotiabank.com
Regional Growth Divergence | North-South Divide + China’s Deceleration + Southern Revival Delayed
Growth deceleration forces remain in place in the developing Americas, yet the pace and scope of economic slowdown varies
from country to country. The growth gap between the two largest regional economies will remain wide in the year ahead. Brazil
will be in deep recession as a profound macroeconomic adjustment to correct sizable fiscal and external imbalances runs its
course. Mexico will benefit from the underlying cyclical strength of the US economy, supported by foreign capital inflows. The
ongoing economic deceleration in China (and associated financial market tension) will mostly be felt in the South American
Pacific nations, also negatively affected by El Niño weather phenomenon estimated to be active until the spring. Domestic
consumption and private investment will support the continuity of relatively positive economic performance in Colombia.
Challenging Commodity Markets | Oil Price Shock + Terms of Trade Erosion + External/Fiscal Adjustment
A slow process of global economic rebalancing in China coupled with persistently weak recovery forces in Japan and the euro
zone exacerbate a weakening phase ingrained in most commodity prices. The sharp collapse in crude oil prices, compounded
by excess global supply conditions translated into a deep contraction of oil production and energy-related fiscal revenue in both
Mexico and Colombia. Structural overdependence on oil exports magnified currency weakness and current account imbalances
in Colombia. Agricultural commodity exporting nations such as Uruguay and Brazil were also casualties of the weakening price
environment magnified by softening demand from China. Finally, both Chile and Peru will remain vulnerable to further erosion in
their terms of trade due to a persistently fragile tone in mining markets and delayed recovery of global demand.
US Dollar Strength | Defensive Emerging Markets + Uneven Currency Realignment + BRIC in Focus
The US dollar (USD) kingdom remains as robust as ever. Growth and interest rate differentials continue to fuel demand for USD
-denominated financial assets. The US remains the world’s leading economic performer. The sharp recession in both Russia
and Brazil coupled with decelerating forces in China reduced growth prospects within the so-called BRIC group. The financially
integrated Latin American economies did not escape from the hostile dollarization forces fuelled by US economic momentum,
commodity price adjustments and expectations of higher US interest rates as the Federal Reserve (Fed) activated a gradual
tightening cycle last December. Brazil’s sharp currency devaluation in 2015 will not be mimicked this year, yet fundamentally
weak commodity-linked currencies will retain a bearish tone in the coming months.
Uneven Monetary Dynamics | Divergent Inflation Forces + Intensified Intervention + Local Capital Flows
The regional inflation outlook incorporates an improving trend in most countries in the region over the next 18 months. However,
inflation dynamics will not be homogenous following heightened price pressures and persistent inflation inertia in selected
economies. Mexico is a regional outperformer in converging to the official inflation target, strongly aided by the oil price decline,
cost reduction due to structural telecommunication reforms and persistent slack in the economy. The other members of the
Pacific Alliance bloc (Colombia, Chile and Peru) suffered the adverse inflationary impact from intensified currency depreciation
and El Niño effect. In response to intensifying inflationary pressures, these economies opted to begin the monetary tightening
phase well in advance of the Fed and Banco de Mexico. In the Southern Cone, Brazil and Uruguay remain subject to high
inflation cycles fuelled by persistent pass-through dynamics and structurally embedded indexation practices.
Global Risk Re-Pricing | Escalating China Stress + US Fed Risk Activated + Credit Differentiation
The Latin American region remains vulnerable to contagion waves from systemically relevant emerging market economies in
distress. Over the past six months, China has presented multiple episodes of financial market convulsion, triggering asset
reallocation shifts away from emerging market assets at large. The profound economic and political crisis present in Brazil,
coupled with the escalating military tensions and economic sanctions in Russia, fuelled negative market sentiment in Latin
America in general. Moreover, the lingering uncertainties regarding the pace of interest rate adjustments by the Fed may
prolong a fragile investor tone through the first half of the year. On a positive note, increasing investor scrutiny may help
differentiate amongst Latin American credits and reward the systemically sound economies of the Pacific Alliance bloc.
Governance & Integration | Mexico Reform Process + Pacific Alliance/TPP + Brazil Isolationism Revisited
Regional integration forces will remain in place in the near term, improving growth prospects in trade-intensive and financially
integrated economies. The Pacific Alliance countries will deepen sectorial linkages on the basis of converging macroeconomic
policies. Mexico will continue implementing its ambitious structural reform agenda, becoming a pivotal market to connect North
America with the promising economies of the south. The election of a reformist government in Argentina augurs a period of
optimism within the Southern Cone to end decades of isolationist and ultra-protectionist practices. The reform of the judiciary
has become a key demand of local citizens and long-term investors alike. The strategic relevance of China as a trade and
investment partner in South America will intensify, while the Trans-Pacific Partnership pact helps develop new markets.
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Global Economics
BRAZIL
Winter 2016
Latin America
Regional Outlook
Pablo F.G. Bréard 1.416.862.3876
pablo.breard@scotiabank.com
Capital Market Dynamics
Foreign Exchange ► The Brazilian real (BRL) will retain a defensive tone through the first half of the year. However, the
extreme depreciation registered over the past 12 months will not be repeated in 2016. The escalating political crisis and ensuing
social tensions may heighten sudden bouts of currency market volatility, yet the key drivers of exchange rate performance will
be the tightening of the US monetary policy, the potential for China-centered emerging market stress, the Brazilian central bank
intervention in foreign exchange markets, multiple sovereign credit rating downgrades, and the success in rebalancing the stilllarge current account and fiscal deficits.
Sovereign Debt & Credit Ratings ► Brazil has lost its investment-grade sovereign rated status. International credit agencies
— in tandem — are executing rating downgrades, in alignment with pricing dynamics in asset markets. A deep and prolonged
recession, wide fiscal and current account deficits, and a highly inflationary environment in the context of an increasingly
unstable political climate, are all key factors impairing the Brazilian sovereign credit outlook. The increase in the country’s public
sector indebtedness and further deterioration in sovereign debt ratios are inevitable. Debt metrics embedded in both
government bond spreads and credit default swaps coupled with sharp erosion in corporate credit quality anticipate a prolonged
period of stress in the months ahead.
Economic Outlook
Growth ► The Brazilian economy remains in recession. Real GDP contracted by 4.5% y/y in the third quarter of 2015, marking
the sixth consecutive quarter of negative growth. Industrial production is estimated to have declined by 8% in 2015 and further
contract, albeit at a lower rate, in 2016. Business investment is forecast to remain weak after falling by 15% y/y in the third
quarter. The deterioration in employment conditions resulting in a profound loss of consumers’ purchasing power, is also an
alarming trend that weighs on local consumption. The national unemployment rate escalated to 8.9% last September, up from
6.5% in December 2014. Economic activity indicators point to real GDP declines ranging between 3.5 and 4.0% in 2015 and 2.5
-3.0% in 2016.
Inflation & Monetary Context ► The fight against inflation is a top macroeconomic priority. Increasing inflationary pressures,
as a result of US dollar appreciation and administered-price adjustments have pushed the IPCA inflation rate into double-digit
territory, keeping the central bank on high alert. Moreover, distorting wage-indexation mechanisms prevent an adequate inflation
control. In response to the acute deterioration of the inflation landscape, we anticipate that the central bank will prolong the
tightening cycle currently under way, with further hikes to its reference rate over the coming year. The anchoring of currency
depreciation expectations is paramount to speeding up inflation convergence to the 4.5% ± 2% target by 2017.
Fiscal & Current Account Balance ► The economic team is implementing a rigorous fiscal adjustment, which is key to
reverting a serious confidence crisis. The public sector fiscal deficit reached 9.3% of GDP in the last 12 months, with the bulk of
the imbalance driven by high debt servicing costs. The consensus of private analysts estimates that the primary fiscal balance
(excluding debt service) may begin to modestly recover in 2016. The path towards attaining a primary fiscal surplus will be a key
trigger of credit rating revisions in the months to come. The current account deficit will close the year below 4% of GDP,
following a positive external sector adjustment; however, foreign direct investment will not be sufficient to cover the external
gap, leading to a higher debt burden.
Institutional Framework & Political Environment
Governance ► The request for the impeachment of President Dilma Rousseff deepens Brazil’s already serious political and
confidence crisis. If initiated, a lengthy impeachment process will have adverse macroeconomic effects through 2016 and could
exacerbate social tension, heighten congressional confrontation and erode the political base of the ruling Partido dos
Trabalhadores. The structural fiscal adjustment under way will most likely be subject to unforeseen congressional approval
delays as it will play second fiddle to the political process. On a positive note, a transparent impeachment mechanism has the
potential to improve the battered judiciary and political institutions and mark the transition to a more credible institutional
framework from 2017 onwards.
Financial Sector ► The domestic banking sector will be subject to profound structural change over the coming year. The broad
-based fiscal adjustment in place will likely curtail credit expansion by state-owned banks and private sector financial institutions.
Total credit expanded by 7.4% y/y over the last 12 months. Consumer credit growth will decelerate sharply due to the household
debt overhang. Asset quality may be vulnerable to further deterioration as increasing stress in corporate debt markets affects
local banks’ balance sheets. Looking ahead, structural reforms will likely reduce the participation of state-owned banks in
domestic lending (currently representing 56% of total bank assets).
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Global Economics
MEXICO
Winter 2016
Latin America
Regional Outlook
Pablo F.G. Bréard 1.416.862.3876
pablo.breard@scotiabank.com
Capital Market Dynamics
Foreign Exchange ► The Mexican peso (MXN) will retain a volatile trading pattern during the first few months of 2016. The
key factors affecting the exchange rate outlook include: the direction of the US dollar (USD) versus its peer currencies, the
relative strength of the US economy, the pace of interest rate adjustments to be implemented by the US Federal Reserve, the
evolution of crude oil prices, intervention by the Mexican central bank, and the overall investor sentiment embedded in
systemically relevant emerging market economies (China and Brazil in focus). The MXN depreciated by 18% against the USD
over the past 12 months (a relatively positive performance when compared against the 34% depreciation of the Brazilian real).
The central bank has intensified its intervention in the FX market (international reserves declined by US$20 billion last year) to
contain volatility.
Sovereign Debt & Credit Ratings ► The Mexican sovereign credit risk has not escaped from the risk aversion mood present
in core emerging markets. Primarily driven by distress within other systemically relevant economies (i.e., Brazil, Russia and
China), Mexican sovereign debt spread (measured by the EMBIG index) has increased from 150 basis points (bps) to 345 bps
since mid-2014. Nevertheless, the Mexican local fixed-income market continues to offer an irresistible high-yield investment
option for non-resident investors. Indeed, the 10-year local-currency yield spread between Mexican and US Treasury bonds has
edged the 400 bps mark over the past few months. The country’s sovereign debt ratings maintain a “stable” outlook according to
all credit rating agencies.
Economic Outlook
Growth ► The Mexican economy is experiencing signs of modest acceleration. Improving private consumption as a result of
favourable employment conditions and historically low inflation remains a key driver of economic activity. Private sector
investment is also showing signs of strengthening, yet at a moderate pace, given that selected sectors (i.e., construction) are
still adversely affected by the sharp reduction in oil prices. We project the Mexican economy to expand by 2.8% this year, and
accelerate to 3.5% in 2017, following an estimated 2.5% growth rate in 2015. The central bank believes that the risks to growth
are tilted to the upside in the year ahead.
Inflation & Monetary Context ► The consolidation of price stability represents a major macroeconomic victory. Consumer
price inflation has been declining over the past 12 months to a rate as low as 2.1% y/y. The absence of demand-driven price
pressures, despite a positive labour market environment, coupled with reductions in the cost of doing business as a result of
structural reforms in the telecommunication sector and persistently low crude oil prices, are the key drivers of the disinflation
dynamics currently in place. Looking ahead, the central bank is very confident that the headline inflation rate will be at or slightly
above the 3% target during 2016. On the monetary front, Banco de Mexico followed the US Federal Reserve and increased its
reference rate by 25 bps in December; market metrics imply that Mexico will surpass the rate hikes to be implemented by the
US in 2016.
Fiscal & Current Account Balance ► The fiscal outlook will likely improve in the year ahead. Following a period of materially
adverse effects caused by the sharp oil price decline and the associated loss of fiscal revenue, the improving growth outlook will
contribute to gradually reduce the consolidated public sector deficit estimated at 4% of GDP in 2015. The continuous
improvement in US economic activity is a key positive factor in the Mexican outlook, as reflected in Mexican export activity in
selected sectors over the past 12 months.
Institutional Framework & Political Environment
Governance ► The administration of President Enrique Peña Nieto remains strongly committed to the implementation of
structural reforms, proof of which is the positive outcome of the recently completed third phase of Round 1 of oil contracts.
Energy sector reform is crucial for Mexico given the double shock caused by the oil price crash and a material reduction in
crude oil production. Following the lead of the US and Japan, Mexico has also signed the Trans-Pacific Partnership agreement,
opening the gates for increased trade diversification to new markets. In addition, Mexico remains committed to strengthening
the Pacific Alliance bloc connecting with the other three trade-intensive and financially integrated South American economies.
Financial Sector ► The Mexican financial sector remains systemically sound and well capitalized. Bank lending to the
household and corporate sector (particularly the medium-sized firms) has expanded over the past year, while the nonperforming loans ratio has been stable in most credit categories. The latest financial stability report highlights that all financial
institutions meet the regulatory liquidity requirements. The US$65 billion flexible credit line approved by the International
Monetary Fund also acts as a strong support mechanism to the financial sector in light of the substantial foreign holdings of
local-currency Mexican securities.
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Global Economics
COLOMBIA
Winter 2016
Latin America
Regional Outlook
Pablo F.G. Bréard 1.416.862.3876
pablo.breard@scotiabank.com
Capital Market Dynamics
Foreign Exchange ► The Colombian peso (COP) remains primarily affected by the direction of energy markets and overall
effects of the oil price shock on the rest of the economy. Following a sharp reduction in crude oil prices, the Colombian currency
has lost 25% against the US dollar over the past 12 months. This currency adjustment reflects a decoupling from other
members of the Pacific Alliance bloc, which have been more resilient to energy price movements. Other key factors affecting the
value of the COP include: the sell-off momentum affecting high yield corporate debt markets, the speed of US monetary policy
normalization, and growth prospects in core countries in Latin America as the Colombian authorities attempt to diversify trade
structures away from US dependence.
Sovereign Debt & Credit Ratings ► The credit outlook for oil-linked sovereign borrowers remains subject to violent headwinds
as a result of ultra-low crude oil prices. In a similar fashion to other energy-intensive exporters, Colombia’s sovereign debt
conditions suffered a gradual deterioration amidst a well-entrenched oil price decline. The cost of insuring government bond
holdings, implied in credit default swaps, has been trending upwards since early November. Investors’ perception of Colombian
sovereign credit risk has suffered the most within the four-member Pacific Alliance universe reflecting relative value
differentiation dynamics. International credit rating agencies will be closely monitoring market trends and economic growth
conditions in the months to come before reassessing their outlook for Colombian sovereign ratings.
Economic Outlook
Growth ► The Colombian economy faces a mixed growth outlook. Despite a challenging external trade and domestic inflation
context, the government firmly believes that domestic demand will lead the economy to grow by 3% this year. The latest
quarterly data for the July-September 2015 period indicated that domestic demand expanded by 2.8% y/y, driven by still healthy
consumption activity despite a modest uptick in the unemployment rate. Despite easier access to domestic credit, residential
construction contracted significantly in the third quarter of last year. The energy sector showed a negative performance as a
result of a substantial decrease in crude oil production and sharp deterioration in the country’s terms of trade. Looking ahead,
the government’s ambitious infrastructure development plan includes a steady increase in civil engineering projects.
Inflation & Monetary Context ► The inflation front has sharply deteriorated; consumer prices increased by 6.8% y/y last
December, prompting monetary authorities to activate a tightening cycle, which has so far placed the central bank reference
rate at 5.75%. The substantial exchange rate depreciation versus the US dollar, coupled with a spike in food-related inflation
resulting from the El Niño weather shock and indexation schemes, was the primary driver of renewed price pressures. Looking
ahead, we project that inflation convergence to the target of 3% ±1% might wait until next year, forcing the central bank to
maintain a prolonged monetary tightening cycle.
Fiscal & Current Account Balance ► The bearish trend affecting Colombian export prices, primarily crude oil, coal and coffee,
continues to impair the country’s terms of trade. The widening current account deficit, which exceeds the 6% of GDP mark,
remains a weak link in the outlook exerting downward pressure on the exchange rate. In addition, the combined effect of slack
in the economy and a significant reduction in oil-related fiscal revenue has led to a fiscal deficit estimated to average 3.4% of
GDP in the next two years.
Institutional Framework & Political Environment
Governance ► President Juan Manuel Santos inaugurated his second four-year term last August. The peace negotiations
between the government and the FARC group are scheduled to reach an agreement in March, following the completion of a five
-point negotiation agenda since 2012. Resistance to the pact amongst selected members of the political opposition and sectors
of the Colombian society remains a potential deterrent. Colombia will retain very favourable bilateral relations with the US, proof
of which is the visit of President Santos to Washington DC in February. Regional integration remains high in the foreign policy
agenda, particularly in advancing the four-member Pacific Alliance initiative. Colombia is not part of the Trans-Pacific
Partnership agreement.
Financial Sector ► The Colombian financial sector remains well capitalized with manageable levels of non-performing loans.
Nevertheless, the cyclical economic slowdown has translated into a phase of deceleration in domestic credit growth. The latest
survey of local credit conditions indicates that mortgage finance and commercial lending continues to grow while there are signs
of moderation in demand in the consumer and micro-credit market segments. Credit supply will be influenced by the pace of
economic growth, better information on customers’ ability to repay obligations and conditions in the exchange rate market.
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5
Global Economics
CHILE
Winter 2016
Latin America
Regional Outlook
Pablo F.G. Bréard 1.416.862.3876
pablo.breard@scotiabank.com
Capital Market Dynamics
Foreign Exchange ► The Chilean peso (CLP) maintains a depreciating tone. A sharp decline in copper prices, growth
deceleration forces in China, persistent financial market stress in systemically relevant emerging market economies (particularly
Brazil, and lately China), ongoing erosion in the country’s terms of trade, and the lingering uncertainties regarding the scope and
pace of interest rate normalization in the US will keep the CLP on the defensive during the first half of the year. It is worth
highlighting that the oil price correction does not offset the adverse economic implications of a copper price crash. The central
bank may, at times, opt to intensify intervention to moderate violent currency swings.
Sovereign Debt & Credit Ratings ► Chile retains the best quality standing of the financially integrated group of Latin
American economies. The challenging external market environment together with a moderated pace of domestic economic
activity has not compromised the Chilean sovereign debt profile. Despite a modest uptick in the insurance cost of government
debt assets, Chile’s credit default swap (CDS) three-month average of 128 basis points still implies a high credit quality. General
government gross debt is estimated at 20% of GDP, the lowest within the developing Americas. All international agencies
maintain a “stable” outlook on Chile’s foreign-currency credit ratings, which currently stand at “Aa3” (Moody’s), “AA-” (Standard
and Poor’s), and “A+” (Fitch).
Economic Outlook
Growth ► The trade-intensive Chilean economy is facing strong headwinds to recover a sustainable growth path. The
international trade and investment fronts have become increasingly hostile. The acute erosion of the terms of trade as a result of
declining copper prices, coupled with increasing costs of international finance as the US Federal Reserve normalizes monetary
policy and a bearish market sentiment affecting core emerging-market economies, has deepened a weak growth environment at
home. Business and consumer confidence metrics still imply a pessimistic outlook, yet the employment environment remains
healthy with a low jobless rate. We estimate that real GDP growth will average 2% in the 2016-17 period, below the 3% potential
growth rate, following an estimated expansion of 2.1% in 2015.
Inflation & Monetary Context ► Inflation convergence to the target is a key priority of monetary authorities. Inflation will be
near 4% y/y through the first half of the year. Exchange rate depreciation remains the core driver of intensifying price pressures
and deviation from the officially established inflation target range of 2% ± 1%. Core inflation metrics are even higher than the
headline reading, approaching the 5% y/y mark. The central bank will remove monetary accommodation on a gradual basis in
line with local inflation and external market conditions. We project a gradual upward adjustment of the central bank rate,
currently set at 3.5%, over the coming months.
Fiscal & Current Account Balance ► Adverse external sector performance will lead to the widening of the current account
deficit, estimated to close the year at 2.6% of GDP, up from 1.7% in 2015. Despite a steady currency depreciation trend, the
eroding terms of trade coupled with a decline in export volumes should lead to upward adjustments in the current account gap
for the next two years, with negative effects on the exchange rate outlook. The fiscal front, however, is showing signs of modest
deterioration due to a muted growth environment and lower contribution from copper-related receipts. The overall budget deficit
may have widened to 3.3% of GDP by the end of 2015.
Institutional Framework & Political Environment
Governance ► The administration of President Michelle Bachelet maintains a majority in congress, yet the reform agenda has
been subject to delays and/or revisions in order to adjust to a more challenging external market context. The debate on the
labour market reform has fuelled congressional tension. Presidential elections are scheduled for November 2017, so it is still too
early to focus on leadership change at present; however, the outcome of the October 2016 municipal elections might provide a
hint of potential policy changes. Chile is a signing member of the Trans-Pacific Partnership agreement, led by the US and
Japan, without compromising its outstanding bilateral trade relations with China.
Financial Sector ► The deceleration in economic activity has negatively affected the pace of credit expansion, particularly in
the commercial and consumer segments. The central bank will maintain an expansionary monetary policy, when measuring the
reference rate in real terms, contributing to a dynamic real estate finance market as reflected in positive housing price and
building dynamics. In its latest financial stability report, the central bank stressed that household debt has modestly increased
and that systemic asset quality indicators remain stable in all credit segments. A stress-test exercise showed that the Chilean
financial sector is well prepared to withstand a severe economic scenario. However, capital adequacy as compared with other
OECD members remains low.
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Global Economics
PERU
Winter 2016
Latin America
Regional Outlook
Pablo F.G. Bréard 1.416.862.3876
pablo.breard@scotiabank.com
Capital Market Dynamics
Foreign Exchange ► The primary factors shaping the Peruvian exchange rate include: the direction of metal prices, weaker
growth dynamics in China, investment flows in the mining sector, the broad-based move of the US dollar (USD) versus major
currencies, central bank intervention to de-dollarize economic structures, and overall investor sentiment toward emerging
markets. The Peruvian sol (PEN) has not escaped the bearish market trend affecting the Latin American region, having
accumulated a depreciation of 13% against the USD over the past 12 months. The pace of currency adjustment has accelerated
recently, as the central bank seems to have opted to reduce its intervention in the foreign exchange market amidst signs of
ongoing deterioration in the country’s terms of trade.
Sovereign Debt & Credit Ratings ► Peru’s sovereign debt profile remains healthy. However, the intensifying stress affecting
the emerging market asset class has triggered a phase of relative credit re-pricing and differentiation within the developing
Americas. Fixed-income market metrics (credit default swaps and sovereign debt spreads) imply a mild deterioration in the
global perception of Peruvian credit risk. Nevertheless, Peru’s sovereign credit ratings maintain a “stable” outlook according to
all rating agencies. The current ratings are: A3 (Moody’s), BBB+ (Standard and Poor’s) and BBB+ (Fitch).
Economic Outlook
Growth ► The Peruvian economy is well positioned to accelerate its rate of expansion in the coming years, yet the output gap
will remain in negative territory until 2017. Following an estimated 2.9% gain in 2015 as a result of weak public sector
investment, real GDP growth will accelerate to 3.5% and 4.4% in 2016 and 2017, respectively. Domestic demand supported by
a major fiscal impulse (which the central bank projects to be 0.8% of GDP in 2016) and resilient consumption activity will
become the major driver of growth in the year ahead.
Inflation & Monetary Context ► The central bank will retain a monetary tightening stance to speed up inflation convergence to
its target. Consumer price pressures, driven by supply-side shocks, such as electricity price adjustments and El Niño weather
effect, and pass-through inertia from currency depreciation, have been trending upwards over the past 12 months. Headline
inflation, which reached 4.4% y/y at the end of 2015, will resume a declining trend to close this year at 3.5%, somewhat above
the official forecast. The central bank will consider demand-side pressures, imported inflation, developments in the US and
China, and investors’ expectations before adjusting its reference rate upward on a gradual basis from the current 3.75% level.
Fiscal & Current Account Balance ► The fiscal outlook contemplates a mild deterioration in the coming year as a result of
renewed public sector investment activity. The consolidated public sector deficit will widen to 2.5-2.8% of GDP this year, up from
an estimated 2.1% at end-2015. Fiscal consolidation will resume from 2017 onwards as economic activity gains momentum and
private sector investment activity becomes the main source of gross capital formation. The central bank projects a reduction in
the current account deficit to 3.6% (2016) from 4% of GDP (2015); we estimate that the risks of a still higher external gap
remain present due to the persistently weak terms of trade expected throughout the year.
Institutional Framework & Political Environment
Governance ► Presidential succession, with elections scheduled for April 2016, will remain the dominant political development
in the first half of the year. For now, Keiko Fujimori and Pedro Kuczynski are leading voting polls. We are of the view that the
policy mix will not be altered in a significant way. However, the new administration will inherit — and will need to adjust to — a
challenging external market environment characterized by plummeting commodity prices, excess capacity in global mining
markets, US monetary policy tightening, China’s economic growth deceleration and a persistently bearish tone in emerging
markets at large. Peru will benefit from multilateral trade liberalization initiatives such as the Pacific Alliance and the TransPacific Partnership, yet bilateral relations with China remain of utmost significance to the country’s growth prospects.
Financial Sector ► The reduction of structural dollarization remains a top priority for authorities. In this regard, the central bank
adjusted regulatory requirements to induce a drop in USD-denominated lending in the year ahead. Despite a decelerated pace
of economic expansion, annual total credit growth is expanding at a 10% y/y rate. Of principal relevance to the government’s dedollarization strategy, sol-denominated credit expanded by near 30% y/y. Mortgage finance activity is slightly decelerating (up
9% y/y) while consumer credit continues to grow at a strong 15% y/y pace. Asset quality within the system remains healthy, with
a non-performing loans ratio of 3%.
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7
Global Economics
URUGUAY
Winter 2016
Latin America
Regional Outlook
Pablo F.G. Bréard 1.416.862.3876
pablo.breard@scotiabank.com
Capital Market Dynamics
Foreign Exchange ► The Uruguayan peso (UYU) will likely maintain a weakening tone in the current year as a result of
persistently high inflation differentials, a fragile tone affecting emerging-market assets, low agricultural commodity prices,
accelerating banking sector dollarization, and low economic growth prospects. A depreciating currency bias affecting Brazil and
Argentina will also compound a negative market tone for the Uruguayan currency. A flexible exchange rate arrangement
remains the best mechanism to adjust to external shocks. The central bank may intensify intervention to moderate adverse
currency swings without compromising FX reserve adequacy.
Sovereign Debt & Credit Ratings ► Uruguay’s creditworthiness remains sound. An active and prudent external liability
management strategy has improved the country’s debt profile, primarily dominated by the issuance of long-term bonds in foreign
jurisdictions. The sovereign credit profile maintains a “stable” outlook according to all international credit agencies. At present,
the sovereign ratings are: “Baa2” (Moody’s), “BBB” (Standard and Poor’s) and “BBB-” (Fitch). Market metrics, however, reflect
the re-pricing momentum affecting emerging markets, as portrayed by the sovereign debt EMBIG spread index which increased
by 100 basis points (bps) to 300 bps over the last six months. Public debt dollarization ratio has recently surpassed the 50%
mark in line with US dollar appreciation trends.
Economic Outlook
Growth ► The Uruguayan economy presents a low-growth high-unemployment outlook for the first half of the year. A persistent
decline in investment activity (clearly reflected in a sharp contraction in construction activity), the moderation in local
consumption due to a high-inflation environment, and an adverse external sector given depressed prices in relevant primary
sector commodities and weak demand from neighbouring Brazil and Argentina are at the core of the deceleration dynamics.
The external sector faces a challenging outlook due to recessionary conditions in both Brazil and Argentina, somewhat
tempered by the gains in the terms of trade as a result of lower crude oil prices. Overall, we estimate that real GDP will modestly
expand at an average rate of 1.4% in 2016-17; the economy grew by just 0.6% y/y in the third quarter of 2015.
Inflation & Monetary Context ► The battle against inflation in the context of a decelerating growth context remains a top
macroeconomic priority. Investment-damaging structural factors linked to embedded indexation practices are primary
impediments to place the headline inflation rate in manageable territory. The consumer price index is bordering the 10% y/y
rate, well above the 3-7% target set by the central bank. Wage adjustment pressures during the collective bargaining cycle
coupled with pass-through effects from currency depreciation will undermine inflation control during the first half of 2016. A tight
monetary policy is inevitable in the year ahead.
Fiscal & Current Account Balance ► Fiscal consolidation is paramount in order to achieve sovereign debt sustainability; the
overall fiscal deficit is projected to close the year at 3.2% of GDP, down from an estimated 3.6% in 2015. The authorities are
fully aware of the challenges to reduce the twin (fiscal and current account) imbalances. Ongoing deceleration of economic
activity weighs on the government’s fiscal revenue targets, acting as a key deterrent to fiscal policy stimulus. The ambitious
infrastructure development programme under way will likely require the increasing use of multilateral and private sources of
funds in the year ahead. Both the Andean Development Corporation and the Inter-American Development Bank will play a role
in this regard, to be complemented by public-private partnerships requiring innovative financing schemes.
Institutional Framework & Political Environment
Governance ► Uruguay retains a business-friendly policy mix. The administration of President Tabaré Vázquez is committed to
implementing a socially inclusive development model with an active role by the State in key sectors of the economy. As a small
trade-intensive open economy, Uruguay will remain influenced by cyclical and policy developments in both Brazil and Argentina,
as well as by the impact of China’s structural rebalancing on relevant commodity markets (agriculture, cattle and forestry
primarily). Labour market rigidities remain a structural obstacle to accelerating the pace of economic growth given the cost
premium caused by existing indexation schemes.
Financial Sector ► The Uruguayan financial sector is dominated by deposit-taking institutions, as local capital markets remain
very modest. The systemic position of universal banks remains sound, yet the loan dollarization ratio (at around 50%) requires
further reduction. The Financial Stability Committee reported that the industry is aptly prepared to weather external shocks
associated with higher US interest rates. Looking ahead, though, a low-growth environment will limit the potential for lending
activity, despite a relatively low credit/GDP ratio. The state-owned bank remains a dominant player in the sector, accounting for
over 40% of the system’s assets.
8
8
Winter 2016
Global Economics
Latin America
Regional Outlook
Key Economic Indicators
Mexico
Brazil
Forecast
2012 2013 2014 2015 2016 2017
Key Economic Indicators
Forecast
2012 2013 2014 2015 2016 2017
Key Economic Indicators
1998
1998
Real GDP (% change)
Current Account Balance (% of GDP)
Foreign Reserves (months of imports)
Exchange Rate USDBRL (% change)
CPI (eop, % change)
Government Fiscal Balance (% of GDP)
Government Debt (% of GDP)
Population (million people)
Nominal GDP (USD bn)
Exchange Rate USDBRL (eop)
Central Bank Interest Rate (eop)
Exports (goods, USD bn)
Imports (goods, USD bn)
Trade Balance (USD bn)
Current Account Balance (USD bn)
Foreign Reserves (USD bn)
1.9
3.0
0.1 -3.7
-3.5 -3.8 -4.4 -3.8
20.4 18.8 19.6 24.7
-9.9 -15.1 -12.5 -49.0
5.8
5.9
6.4 10.7
-2.6 -3.1 -6.2 -9.5
64
62
65
70
-3.0
-2.7
24.3
-8.6
7.0
-7.0
72
1.8
-2.6
23.4
-4.7
5.5
-6.0
75
199 201 203 204 206 208
2,429 2,408 2,372 1,691 1,505 1,454
2.05 2.36 2.66 3.96 4.30 4.50
7.25 10.00 11.75 14.25 15.00 14.00
243 242 225 185 200 210
223 240 229 180 185 195
19
2
-4
5
15
15
-84
-91 -104
-64
-40
-38
379 376 374 370 375 380
Colombia
Real GDP (% change)
Current Account Balance (% of GDP)
Foreign Reserves (months of imports)
Exchange Rate USDMXN (% change)
CPI (eop, % change)
Government Fiscal Balance (% of GDP)
Government Debt (% of GDP)
Population (million people)
Nominal GDP (USD bn)
Exchange Rate USDMXN (eop)
Central Bank Interest Rate (eop)
Exports (goods, USD bn)
Imports (goods, USD bn)
Trade Balance (USD bn)
Current Account Balance (USD bn)
Foreign Reserves (USD bn)
4.0
-1.3
5.3
7.8
3.6
-3.8
43
1.3
2.3
2.5
-2.3 -1.8 -2.9
5.6
5.8
5.2
-1.4 -13.2 -16.6
4.0
4.1
2.1
-3.7 -4.6 -4.0
46
50
52
2.8
-2.9
5.4
-1.8
4.5
-3.8
52
3.5
-2.5
5.4
4.1
3.9
-3.5
52
117 118 120 121 122 124
1,248 1,310 1,328 1,163 1,172 1,304
12.9 13.0 14.8 17.21 17.52 16.81
4.50 3.50 3.00 3.25 4.50 5.50
371 380 397 391 412 441
371 381 400 404 423 447
0
-1
-3
-13
-11
-6
-16
-30
-24
-33
-33
-32
164 177 193 176 190 200
Chile
Forecast
2012 2013 2014 2015 2016 2017
Key Economic Indicators
1998
1998
Real GDP (% change)
Current Account Balance (% of GDP)
Foreign Reserves (months of imports)
Exchange Rate USDCOP (% change)
CPI (eop, % change)
Government Fiscal Balance (% of GDP)
Government Debt (% of GDP)
Population (million people)
Nominal GDP (USD bn)
Exchange Rate USDCOP (eop)
Central Bank Interest Rate (eop)
Exports (goods, USD bn)
Imports (goods, USD bn)
Trade Balance (USD bn)
Current Account Balance (USD bn)
Foreign Reserves (USD bn)
4.1
-3.0
7.6
8.8
2.4
0.1
34
4.9
4.6
3.2
-3.3 -5.3 -6.3
8.8
8.9
9.8
-9.2 -23.2 -33.6
1.9
3.7
6.8
-2.3 -2.4 -3.2
38
44
51
2.9
-5.6
9.6
-4.0
5.0
-3.5
49
3.2
-4.7
9.4
-4.5
3.0
-3.3
48
47
47
48
48
49
49
372 375 367 286 261 258
1,767 1,930 2,377 3,175 3,300 3,450
4.25 3.25 4.50 5.75 6.00 5.00
60
59
55
45
49
55
59
59
64
55
56
60
1
-1
-9
-10
-7
-5
-11
-12
-20
-18
-15
-12
37
44
48
45
45
47
Peru
Forecast
2012 2013 2014 2015 2016 2017
Key Economic Indicators
Forecast
2012 2013 2014 2015 2016 2017
Key Economic Indicators
1998
Real GDP (% change)
Current Account Balance (% of GDP)
Foreign Reserves (months of imports)
Exchange Rate USDCLP (% change)
CPI (eop, % change)
Government Fiscal Balance (% of GDP)
Government Debt (% of GDP)
5.5
-3.6
6.6
7.8
1.5
0.7
12
4.2
1.9
2.1
-3.7 -1.2 -1.7
6.6
7.1
7.8
-9.7 -15.4 -16.8
2.9
4.6
4.4
-0.5 -1.5 -3.3
13
15
18
1.9
-2.6
7.6
-0.3
3.3
-3.0
20
2.9
-3.4
7.6
0.4
3.0
-2.5
22
Population (million people)
Nominal GDP (USD bn)
Exchange Rate USDCLP (eop)
Central Bank Interest Rate (eop)
Exports (goods, USD bn)
Imports (goods, USD bn)
Trade Balance (USD bn)
Current Account Balance (USD bn)
Foreign Reserves (USD bn)
17
266
479
5.00
78
75
2.3
-10
42
18
273
525
4.50
76
75
1.8
-10
41
18
233
710
3.75
66
63
3
-6
40
18
248
708
4.25
71
65
6
-9
41
18
255
606
3.00
76
68
7.8
-3
40
18
235
709
3.50
64
60
4
-4
39
Uruguay
Forecast
2012 2013 2014 2015 2016 2017
Key Economic Indicators
1998
Real GDP (% change)
6.0
5.9
Current Account Balance (% of GDP)
-2.7 -4.3
Foreign Reserves (months of imports)
18.7 18.7
Exchange Rate USDPEN (% change)
5.4 -9.6
CPI (eop, % change)
2.6
2.9
Government Fiscal Balance (% of GDP) 2.1
0.8
Government Debt (% of GDP)
21
20
2.4
2.9
-4.0 -4.1
18.3 20.3
-6.5 -14.6
3.2
4.4
-0.3 -2.2
21
22
3.5
-4.0
19.7
-1.1
3.5
-2.5
25
4.4
-2.6
19.5
-1.4
3.0
-2.2
25
Population (million people)
Nominal GDP (USD bn)
Exchange Rate USDPEN (eop)
Central Bank Interest Rate (eop)
Exports (goods, USD bn)
Imports (goods, USD bn)
Trade Balance (USD bn)
Current Account Balance (USD bn)
Foreign Reserves (USD bn)
31
200
2.98
3.50
40
41
-1
-8
62
31
188
3.45
4.00
36
38
-3
-7
63
32
201
3.50
4.00
40
40
0
-5
64
30
31
194 199
2.55 2.80
4.25 4.00
47
43
41
42
6
1
-5
-8
64
66
31
190
3.41
3.75
34
37
-3
-8
62
Real GDP (% change)
3.3 5.1 3.5 1.5 1.3 2.5
Current Account Balance (% of GDP)
-5.2 -5.1 -4.6 -3.4 -3.0 -2.4
Foreign Reserves (months of imports)
14.8 17.9 18.3 16.6 17.0 16.4
Exchange Rate USDUYU (% change)
3.9 -12.1 -13.1 -23.0 -13.7 -8.8
CPI (eop, % change)
7.5 8.5 8.3 9.4 9.5 8.5
Government Fiscal Balance (% of GDP) -2.7 -2.3 -3.5 -3.6 -3.2 -3.0
Government Debt (% of GDP)
61
58
58
59
60
60
Population (million people)
Nominal GDP (USD bn)
Exchange Rate USDUYU (eop)
Exports (goods, USD bn)
Imports (goods, USD bn)
Trade Balance (USD bn)
Current Account Balance (USD bn)
Foreign Reserves (USD bn)
3.4 3.4 3.4 3.4 3.4 3.4
51
57
57
53
51
51
19.2 21.5 24.3 29.9 34.0 37.0
9
9
10
11
12
12
11
11
12
12
11
12
-2
-2
-2
-1
1
0
-3
-3
-3
-2
-2
-1
14
16
18
16
16
17
Source: National authorities, International Monetary Fund, Bloomberg and Scotiabank Economics. Data as of January 13, 2016.
9
Winter 2016
Global Economics
Latin America
Regional Outlook
Macroeconomic Metrics
Real GDP Growth (% Change)
Current Account Balance (% of GDP)
6.0
0.0
Last Decade
5.0
2016-17 (f)
-1.0
4.0
4.0
3.0
3.1
3.1
3.1
-2.7
-3.0
-3.0
2.4
2.0
-2.0
-2.6
-2.7
-3.3
1.9
Last Decade
-4.0
1.0
2016-17 (f)
0.0
-1.0
Brazil
-5.1
-5.0
-0.6
Uruguay
Chile
Colombia
Pacific
Alliance
Mexico
Peru
-6.0
Colombia
Peru
Public Sector Fiscal Balance (% of GDP)
1.0
Chile
Uruguay
Mexico
Brazil
Gross Public Sector Debt (% of GDP)
74
70
0.0
60
-1.0
60
Last Decade
-2.0
-2.4
-3.0
-3.1
-3.4
-3.7
2016-17 (f)
50
52
-2.8
48
40
-4.0
Last Decade
-6.0
30
2016-17 (f)
-5.0
21
-6.5
10
-7.0
Brazil
Mexico
Colombia
Uruguay
Chile
Chile
Peru
Peru
Inflation (Annual % Change)
9.0
9.0
Last Decade
8.0
25
20
Colombia
Mexico
Uruguay
Brazil
Central Bank Short-Term Interest Rate (%)
14
2016-17 (f)
12
7.0
10
6.3
6.0
6
5.0
4.0
3.9
3.0
Brazil
Chile
Colombia
Mexico
Peru
8
3.2
4.0
4
4.2
2
3.3
Jan-16
Jul-15
Oct-15
Apr-15
Jan-15
Jul-14
Oct-14
Apr-14
Jan-14
Jul-13
Oct-13
Apr-13
Jan-13
Jul-12
Uruguay
Oct-12
Brazil
Apr-12
Mexico
Jan-12
Colombia
Jul-11
Pacific
Alliance
Oct-11
Peru
Apr-11
Chile
Jan-11
0
2.0
Source: National authorities, International Monetary Fund, Bloomberg and Scotiabank Economics. Data as of January 13, 2016.
10
Winter 2016
Global Economics
Latin America
Regional Outlook
Financial Market Metrics
Currency Market | 5-year Performance vs. USD (%)
Currency Market Performance | 5-year % change vs. USD
0
10
0
-10
-19
-10
-20
-20
-30
-32
-33
-35
-40
-30
-42
-40
-50
-50
-58
Equity Market Performance | 5-year Local-Currency % Return
Jan-16
Jul-15
Oct-15
Apr-15
Jan-15
Jul-14
Oct-14
Apr-14
Jan-14
Jul-13
Oct-13
Apr-13
Oct-12
Equity Market | 5-year Local Currency % Return
30
8
Jan-13
Peru
Jul-12
Chile
Apr-12
Mexico
Jan-12
Uruguay
Jul-11
Colombia
Oct-11
Brazil
Apr-11
Jan-11
-60
-60
10
BRL
CLP
COP
MXN
PEN
UYU
20
0
10
-10
0
-10
-20
-28
-30
-30
-20
-30
Latin America (MSCI)
Brazil
Chile
Colombia
Mexico
Peru
-40
-44
-50
-50
-60
-59
-60
Oct-15
Jan-16
Oct-15
Jan-16
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Jul-15
550
Jul-15
Sovereign Debt Profile | Credit Default Swaps (bps)
Oct-12
-70
Mexico
Jul-12
Chile
Apr-12
Latin
America
(MSCI)
Jan-12
Brazil
Oct-11
Colombia
Jan-11
Peru
Jul-11
-47
Apr-11
-40
Credit Default Swaps | 5-year Market Trend (bps)
500
Brazil
Chile
Colombia
Peru
Mexico
488
Brazil
450
400
274
Colombia
350
300
207
Peru
250
200
186
Mexico
150
100
139
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
500
Jul-13
450
Apr-13
400
Oct-12
350
Jan-13
300
Jul-12
250
Apr-12
200
Oct-11
150
Jan-12
100
Jul-11
50
Apr-11
0
50
Jan-11
Chile
Source: Bloomberg. Data as of January 13, 2016.
11
Winter 2016
Global Economics
Latin America
Regional Outlook
Foreign Currency Long Term Sovereign Credit Ratings
INVESTMENT GRADE
Moody's
RATING
Aaa
EUROPE
ASIA & OCEANIA
Canada
United States
Austria (-)
Denmark
Finland (-)
Germany
Luxembourg
Netherlands
Norway
Sweden
Switzerland
Australia
New Zealand
Singapore
United Kingdom
Hong Kong
France
Macau
South Korea
Aa1
Aa2
Aa3
A1
Cayman Islands
Chile
Belgium
Bermuda
Czech Republic
Mexico
Peru
Baa3
Japan
RATING
AAA
AA+
Kuwait
Qatar
United Arab
Emirates
Saudi Arabia
Israel
Oman (-)
Malaysia
AMERICAS
EUROPE
ASIA & OCEANIA
Canada
Denmark
Germany
Luxembourg
Netherlands
Norway
Sweden
Switzerland
United Kingdom (-)
Australia
Hong Kong
Singapore
United States
Austria
Finland (-)
Belgium
France (-)
New Zealand
Chile
Czech Republic
China
South Korea
Taiwan
Bermuda
Ireland
Slovakia
Japan
AA
AA-
A+
Thailand
Bahamas
Colombia
Panama
Trinidad and Tobago (-)
Uruguay
Iceland
Italy
Spain (+)
Kazakhstan
Philippines
South Africa (-)
Brazil *-
Romania (+)
Slovenia
Turkey (-)
India (+)
Indonesia
Bahrain (-)
Kuwait
Qatar
Poland (+)
Slovenia (+)
BBB+
BBB
BBB-
RATING
AMERICAS
EUROPE
ASIA & OCEANIA
AAA
Canada
United States
Denmark
Finland (-)
Germany
Luxembourg
Netherlands
Norway
Sweden
Switzerland
Australia
Singapore
AA+
Austria
United Kingdom
Hong Kong
AA
Belgium (-)
France
New Zealand (+)
Israel
Saudi Arabia (-)
A+
Malaysia
Aruba
Mexico
Peru
Turks and Caicos
Malta (+)
Spain
Thailand
Chile
Colombia
Panama
Uruguay
Iceland
Kazakhstan (-)
Philippines
Bahamas (-)
Italy
Romania
India
A-
Oman (-)
Bahrain (-)
Morocco
South Africa (-)
MIDDLE EAST
& AFRICA
Kuwait
Saudi Arabia (-)
South Korea
AA-
A
A-
Ireland (+)
Fitch
MIDDLE EAST &
AFRICA
Trinidad and
Tobago (-)
A
Malta
Baa1
Baa2
China
Taiwan
MIDDLE
EAST &
AFRICA
Poland
Slovakia
A2
A3
Standard & Poor's
AMERICAS
BBB+
Mexico
Peru
BBB
Colombia
Panama
BBB-
Aruba
Uruguay
Czech Republic
Slovakia
China
Taiwan (+)
Malta
Japan
Ireland (+)
Poland
Malaysia
Iceland
Italy
Slovenia (+)
Spain
Kazakhstan
Thailand
Romania
Russia (-)
Turkey
India
Indonesia
Philippines (+)
Bahrain (-)
Morocco
South Africa
ASIA & OCEANIA
MIDDLE EAST
& AFRICA
Sri Lanka
Vietnam
Tunisia
Pakistan
Egypt
Lebanon (-)
Israel
SPECULATIVE GRADE
Moody's
RATING
AMERICAS
EUROPE
Ba1
Costa Rica
Guatemala (-)
Croatia (-)
Hungary (+)
Portugal
Russia
Standard & Poor's
ASIA & OCEANIA
MIDDLE
EAST &
AFRICA
Morocco
Ba2
Ba3
B1
B2
B3
El Salvador (-)
Bangladesh
Tunisia
Papua New Guinea (-)
Sri Lanka
Vietnam
Jordan
Nicaragua
Cambodia
Lebanon (-)
Barbados (-)
Ecuador
St. Vincent and the
Grenadines (-)
Pakistan
Egypt
Dominican Republic
Cyprus
Caa1
Caa2
Caa3
RATING
AMERICAS
EUROPE
ASIA & OCEANIA
Brazil (-)
Hungary
Portugal
Russia (-)
Turkey (-)
Indonesia (+)
BB
Costa Rica
Guatemala
Croatia (-)
BB-
Dominican
Republic
Cyprus (+)
BB+
B+
B
B-
CCC
Venezuela
Greece
Bangladesh
Vietnam
Jordan
AMERICAS
EUROPE
BB+
Brazil (-)
Costa Rica (-)
Hungary (+)
Portugal (+)
Guatemala
Croatia (-)
BB-
B+
Belize
Pakistan (+)
Greece
Egypt
Lebanon (-)
B-
CCC
CCC-
CC
CC
-
C
Note : (+) positive outlook
SD
(-) negative outlook
Jamaica (+)
CCC+
CCC-
Argentina (+)
Cyprus (+)
B
-
Ca
Dominican
Republic (+)
El Salvador
Ecuador
Barbados (-)
Ecuador
Jamaica
Venezuela (-)
RATING
BB
Papua New Guinea (-)
Sri Lanka
El Salvador
CCC+
Belize
Cuba (+)
Jamaica (+)
Fitch
MIDDLE EAST &
AFRICA
Venezuela
Greece
C
Argentina
RD
N.R. - Not Rated.
When Moody's places a rating on watch in the short-term *+ denotes possible upgrade, *- denotes possible downgrade & * denotes developing. A credit is removed from the Watchlist when the rating is upgraded, downgraded or confirmed.
Ratings as at January 2016
12
Winter 2016
Global Economics
Latin America
Regional Outlook
CONTRIBUTORS
Pablo F.G. Bréard, Head
1.416.862.3876
pablo.breard@scotiabank.com
Tuuli McCully
1.416.863.2859
tuuli.mccully@scotiabank.co
Rory Johnston
1.416.862.3908
rory.johnston@scotiabank.com
Estela Molina
1.416.862.3199
estela.molina@scotiabank.com
Scotiabank Economics
Scotia Plaza 40 King Street West, 63rd Floor
Toronto, Ontario Canada M5H 1H1
Tel: 416.866.6253 Fax: 416.866.2829
Email: scotia.economics@scotiabank.com
Erika Cain
1.416.866.4205
erika.cain@scotiabank.com
Juan Manuel Herrera
1.416.862.3174
juanmanuel.herrera@scotiabank
This report has been prepared by Scotia Economics as a resource for the clients of Scotiabank.
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subject to change without notice. The information and opinions contained herein have been
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