Moody’s States Inflation Is Affecting Economic Recovery in Part of Latam – Economics Bitcoin News

Moody’s, the asset quality rating agency, has warned the high rate of inflation that some countries are facing in Latam will affect the economic recovery in the region. Mexico, Brazil and Chile are the most affected countries by the phenomenon. The recovery of these countries will be dependent on factors other than inflation.

Moody’s States Latam Spending Recovery Might Be Hampered by Inflation

Latam’s inflation problem is now a serious issue. This has a negative impact on the recovery forecasts of many countries following the Covid-19 pandemic. A recent note issued by asset quality rating agency Moody’s stresses that inflation will be a decisive factor in the future of the economic recovery of the area.

This note mentions Brazil (Chile), Mexico, and Mexico, as countries where private spending growth is likely to be affected by high inflation rates. But, there will be other factors that impact this spending recovery.

This note indicated that Mexico’s wages, Brazil’s consumer confidence and Chile’s creation speed will all have an impact on the growth of the economy in the future.

Each Factor

Mexico was one of many countries with high inflation rates for this year. According to numbers from Banxico, the central bank of the country, May’s inflation rate was a touch below its highest number in 21 years. Moody’s explains the large amount of people outside of the formal job system will aggravate this issue because the company expects few raises for workers in these conditions.

Brazil has an advantage over Mexico because of its high level of formality and willingness to increase wages to meet high inflation rates. Chile faces difficulties now because of political issues surrounding the redaction of a new constitution. This task has been proposed and carried out by Gabriel Boric the president.

The country’s recovery could be negatively affected by this political uncertainty. Boric also stated that, if the Chileans reject the constitution, then another constitutional process will have to be initiated.

The Bank of Spain published a report in April expressing concern over the development of political instability as a consequence of the loss of purchasing powers by most vulnerable households and how this could impact the Latam growth forecasts.

Let us know your thoughts on how high inflation will impact private spending in Latam. Comment below.

Sergio Goschenko

Sergio is a Venezuelan cryptocurrency journalist. His entry into the cryptosphere during December 2017, when prices were rising, he describes himself as being late. His background is in computer engineering, but he also lives in Venezuela and was impacted at the social level by the crypto boom. He offers an alternative perspective on the success of cryptocurrency and the benefits it has for the underbanked.

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