BUENOS AIRES, Aug 24 (Reuters) - Latin America will likely grow a modest 1 percent or less as a region this year as governments struggle to pass reforms after years of populism and economic mismanagement, a managing director of Standard & Poor’s said on Thursday.
That is well below the 2.5 percent growth rate projected for the United States and 6 percent in Asia, said Roberto Sifon Arevalo, who follows sovereign and international public finance ratings in Latin America for the credit rating agency.
“Many countries, especially the big ones in the region, are coming out of high commodity prices which allowed them to do a lot of populism, with a lot of spending and little control and this has a cost,” he said in an in an interview.
“The region is quite disappointing,” he said.
Sifon Arevalo praised center-right Argentine President Mauricio Macri’s reform efforts since taking office in late 2015 but said he would like to see the fiscal deficit lowered faster in the region’s third largest economy.
“The level of debt keeps growing,” he said.
In Brazil, the region’s largest economy, Sifon Arevalo said the agency was waiting to see if planned reforms came to fruition. S&P last week held Brazil’s rating at “BB” while lowering its outlook to negative.
In Colombia, which passed a tax reform late last year, Sifon Arevalo said S&P wanted to see new fiscal numbers efore deciding whether to change its rating.
S&P has a “relatively low growth estimate” for Peru due to fallout from a corruption scandal involving Brazilian builder Odebrecht, which has slowed public works projects.
While Peru has an investment grade rating of BBB+, Sifon Arevalo said “two years ago it was much more comfortable at this rating level than it is now.” (Reporting by Eliana Raszewski; Writing by Caroline Stauffer; Editing by Tom Brown)