Substantial near-to-medium term challenges to LatAm

The lower commodity prices have worsened the current account and fiscal balances of Latam countries on average over last few years. While the shrinking domestic economy has resulted in falling imports, limiting the damage on the current account front to some extent, in Brazil and Chile, lower imports are unlikely to help further. 

"Export demand for most of Latam ex Mexico is unlikely to pick up anytime soon. On the fiscal front, Brazil has officially downgraded its fiscal targets for 2015 and 2016 and there exists downside risk to even the revised targets", says Societe Generale. 

Chilean fiscal outlook remains well managed but the advantage is shrinking as the government continues with its counter-cyclical and social sectorspending. While Mexico's medium-term outlook on the current account (and eventually the fiscal balances) will improve with manufacturing competitiveness assuming US trend economic growth, its near-term outlook faces lower oil prices and revenue growth to state oil company Pemex.