Prospects for increasing infrastructure investment in Latin America remain weak, says GlobalData

As Latin America faces a new electoral cycle and an economy deeply devastated by a damaging fresh wave of COVID-19 infections and renewed lockdown restrictions, the prospects for governments in the region to increase spending for infrastructure this year remain weak, says GlobalData, a leading data and analytics company.

According to GlobalData’s report, ‘Prospects for Public Infrastructure Projects, The Americas’, of the ten markets assessed in the region, only two (Chile and Uruguay) have “moderate” prospects to accelerate investment, while the remaining eight markets have either “weak” or “very weak” prospects.

Dariana Tani, Economist at GlobalData, comments: “While higher commodity prices amid an improving external environment are welcoming news, especially for resource-oriented exporters, public debt issues, supply chain disruptions, rising inflation, and growing political and social tensions due to soaring unemployment and poverty levels, are likely to continue to hold back foreign and private investment in infrastructure in the coming years.

“In Chile, for instance, coronavirus cases have been increasing rapidly in the past three weeks despite the country being a global leader in COVID-19 vaccinations, raising concerns over new or extended lockdowns and the recovery of the economy. Additionally, Chile’s political outlook remains volatile following last month’s election for the new Constitutional Convention and the presidential elections later this year.

“In Colombia, meanwhile, the recent mass protests against the now withdrawn tax reform have intensified fiscal risks and prompted S&P, the credit rating agency, to downgrade the country’s sovereign debt to junk status (below investment grade).”

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