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Fitch: Latin America undergoes recovery, but challenges persist

Latin America is undergoing a recovery process, supported by stabilization, although many countries are still facing challenges, Fitch Ratings said.

Other factors driving recovery in the region include an upturn in commodity prices, improving external conditions, lower inflation in most countries, monetary easing, and favorable borrowing rates.

However, Fitch noted that most countries are posting below-trend growth, due to lower investment rates and lagging productivity. Other countries are also facing pressure in the passage of reforms or policy adjustments, negative spill-overs from corruption cases and several upcoming elections.

Moreover, fiscal consolidation in the region is facing greater strain, due to a combination of a shallow economic recovery, loss of commodity revenues, uneven progress on revenue-enhancing reforms, continued spending pressures, and reconstruction costs related to natural disasters, Fitch said.