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12:05 Peru, Chile best poised to ride out int'l slowdown
 
Lima, Jun. 02 (ANDINA). Peru and Chile are best positioned in Latin America to withstand a slowdown in the global economy and a drop in commodity prices, Fitch Ratings reported Saturday.
Photo: ANDINA/Héctor Vinces.
Photo: ANDINA/Héctor Vinces.
"Both Chile and Peru have large rainy-day funds and their government debt is a relatively small fraction of their economic output at about 20 percent or less, Shelly Shetty, head of the sovereign ratings for Latin America said.

The two Andean neighbors have the fiscal flexibility to cope with a potential drop in capital in-flows, sharply lower prices for metals - their main exports, Shetty stated.

She noted that Peru's fiscal stabilization fund is more than $5 billion, or about 3.5 percent of the gross domestic product (GDP).

"A slowdown in China will hurt the region's economies, especially those with large, commodity-based export sectors," Shetty added.

Moreover, she pointed out that a rule of thumb says a one percent decline in China's growth rate will cut growth by about 1.2 percent in the commodity exporters.

Colombia, Brazil and Mexico can also counter any shock waves from abroad, but to a lesser extent, she said.

As for the impact of Europe's crisis on the region, trade exposure to Europe is concentrated more in the southern cone region of South America - Brazil, Argentina, Chile and Peru - than Mexico and Central America, Shetty noted.

(END) JJN/RES/RZZ/MOC
Date: 02/06/2012
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