EUR 292.30 For Business Accounts Only

BancTrust & Co. Quarterly Report 1Q2020

• Except for Argentina and Guatemala, we see an across-the-board but moderate acceleration of growth in 2020, as trade tensions subside and there is room to engage in monetary easing
• However, fiscal policy is constrained due to a rapid rise in indebtedness and structurally low tax revenues
• Elections will be critical in Dominican Republic (2020) and Ecuador (2021)

In Argentina, we expect the debt restructuring to be successful but policy-risks dominate particularly when the electoral cycle resumes in 2021. In  Costa Rica, fiscal uncertainty is growing as the government needs to rein-in spending. In Dominican Republic, political tension is mounting and could eventually hit bonds valuations. In Ecuador, all eyes are set on the recent break-up of the ruling coalition in the National Assembly and how this might condition the progress of reforms committed with the IMF. Guatemala would be the most affected country by the slowdown in the US with growth cooling in 2020. Panama has once again revised up its fiscal deficit ceiling and should engineer a comprehensive tax reform to prop up revenues. In Venezuela, we see the de facto dollarisation and the liberalisation of imports and prices leading to a stabilization of activity, giving a breather to the Maduro regime.