December 9, 2025
Fitch Ratings-New York-04 December 2025: Fitch Ratings expects Latin American sovereigns to stay resilient amid a still unpredictable global backdrop in 2026, although not emerging as a major beneficiaries, supporting a ‘neutral’ sector outlook.
Shifting US trade and migration policies have not severely hurt the region so far, but their impact may take time to fully materialize, and uncertainty persists, namely around the upcoming review of the USMCA. The US’s heightened geopolitical interest in the region could continue to be a source of positive and negative surprises, with military tensions around Venezuela a flashpoint to monitor.
We expect a neutral backdrop in terms of global growth and commodity prices. Financing conditions should benefit from rate cuts by the US Federal Reserve, having already benefitted in 2025 from some portfolio redirection away from US assets. Should a more adverse backdrop emerge, moderate external balances, flexible currencies and/or strong FX reserves, and sound banking systems should help the region cope.
While we do not expect the ongoing wave of elections to be a source of risk to macro stability they could hamper prospects for reforms to address growth and fiscal challenges that remain a weak spot for most of the region. Weak public finances in many places restrain scope for counter-cyclical policy and growth-enhancing efforts. Growth prospects remain lackluster in most places, and a source of social reform.
The balance of Positive to Negative Outlooks in Latin America is 5:1, which could portend a fourth consecutive year of net upgrades. Positive rating actions have been concentrated among the region’s frontier markets. Most larger economies continue to struggle with growth and fiscal challenges limiting rating upside, or posing a downside for Colombia (the sole sovereign on Negative Outlook).
‘Latin America Sovereign Outlook 2026’ is available at www.fitchratings.com or via the link above.