MercoPress. South Atlantic News Agency

Argentia economic situation can become 'harmful' for the region says Moody's

“Inflation, high interest rates and recession have forced Argentine consumers to cut expenses, which can impact negatively on the region

Credit ratings agency Moody's Investors Service has warned about the Argentine situation which can become “harmful” for Latin America, stating that the country's economy is in “decline” and qualifying current policies as “highly risky.”

“Inflation, high interest rates and recession have forced Argentine consumers to cut expenses, which can impact negatively on the region, especially on Brazil, Chile and Peru, very close trade partners” a document released by the ratings agency reads.

“Argentina’s sustained economic decline is a threat to Latin America’s growth and to the social progress achieved in the region during the past decade. Together with Brazil, Chile and Peru, Argentina’s growth will be under the 2014-2013 average for the region.”

Moody’s has been a steady critic of Argentina’s economic policies.

“Bank loans are falling in the range of 20 to 30% and the situation which emerged following the selective default in the bonds dispute will further limit Argentina's financing options for corporations and will lead to a greater devaluation of the Peso, plus more inflation”, says the report.

“The companies that will be more exposed to the slowdown of the economy are retailing, car manufacturing, construction, airlines, sale of high priced goods, and those which depend on credit but are not essential”, added the report drafted by Gersan Zurita, Moodys' Senior Vice-president.

Zurita pointed out that the overall scenario for Latin America is that economic growth is slowing down, and has proved to be much less dynamic than that originally expected for the first half of 2014, with an impact on consumption and investments.

Finally the ongoing deterioration of the Argentine economy threatens with damaging the strong social advances achieved during this last decade of strong sustained growth.