LatAm Looks Weak Versus Asia, Says S&P

LatAm is falling well behind Asia in using trade and foreign investment to modernize its economy and reduce external vulnerability, says S&P. “Latin American countries have had limited success in being able to insert themselves into global production chains to boost the technology and efficiency of local firms and spread such benefits into other sectors of the economy that do not engage directly in trade,” says S&P analyst Joydeep Mukherji. “Hence, they have been less successful in raising the technological sophistication of their industrial sector and gaining market share in global exports than many rated sovereigns in Asia. The poor results are reflected in their relatively weak economic structure and levels of external liquidity as compared with most rated Asian sovereigns,” he adds. But the agency says these shortcomings do not preclude continued modest improvement in sovereign credit ratings in LatAm in coming years. “However, they prevent much of the region from making the most of the opportunities that arise from globalization, constraining its overall sovereign creditworthiness compared with many countries in Asia,” concludes Mukherji.