MEXICO CITY, July 11 . Rampant corruption in Latin America is the biggest obstacle to improving the region’s credit standings and economic competitiveness, credit rating agency Moody’s Investors Service said Wednesday.
Latin American countries have other issues to deal with besides corruption, including fluctuating global prices for raw materials and capital flows, technological disruption and worsening inequality, Moody’s said.
The report notes the region’s short-term credit outlook remains “extensively stable,” despite the low prices for raw materials and unsteady capital flows due to the global trade tensions.
Raw materials’ fluctuating prices have a direct impact on the credit quality of the mining, oil and gas sectors, the report said.
Innovative technologies are transforming industries in Latin America, especially in Argentina, Brazil, Chile and Mexico.
However, without adequate oversight, technologies could only worsen the gap between skilled and unskilled labor in the region, and continue to impede economic growth and the creditworthiness of consumers, corporations, financial institutions and governments, warned Moody’s.
The International Monetary Fund (IMF) in April downgraded its growth forecast for Latin America for the next two years, citing uncertainty from a global slowdown and troubled financial conditions in the region’s top economies.
The region could see economic growth of 1.4 percent this year and 2.4 percent next year, according to the IMF report World Economic Outlook.