Latin American economies could take a punch to the gut if the United States sees a “double-dip” in its economic recovery or if Chinese economic growth flattens out, according to a new report by Fitch Ratings, a New York-based credit rating agency.
“We believe that economies with strong trade links to the U.S. economy, particularly Mexico and Central American nations, could contract or decelerate sharply if a ‘double-dip’ occurs in the U.S.,” Fitch Director Santiago Mosquera said.
Demand for Latin American exports would fall off, the report says, if a double-dip hits the U.S. Ripples from that shock would be felt in other sectors in regional economies that are largely export-oriented. Smaller, tourism-dependent economies, like Costa Rica, would see cash from that industry fall off.
A hard landing in China as economic growth flattens there could wreak havoc on commodities markets, according to the report.
Countries like Venezuela, Ecuador, Bolivia and Mexico that depend on commodity exports for much of their revenues would feel shocks from a Chinese hard landing, the report says.