NEW YORK--(BUSINESS WIRE)--U.S. corporates are cautious on their near-term outlooks towards Mexico and Brazil and concerned about growth opportunities due to a combination of economic factors and issues affecting regional companies, according to a Fitch Ratings report.
Fitch's report is based on an aggregation of fourth-quarter public comments made by U.S. companies in the energy, natural resource, chemical, industrial and mining sectors.
Weakening local currency rates and rising inflation are key concerns for corporations with significant sales in both countries. Year-over year, the real and the peso have depreciated by negative 18% and negative 4%, respectively, and this trend could continue in future quarters if U.S. interest rates rise further. In some cases, local inflation has added to margin issues and led companies to cut costs, reprice products, or take other measures to maintain margins.
Brazil's continued economic sluggishness represents a risk for labor market and fiscal dynamics. Inflation in Brazil remains elevated despite the lackluster economic activity. In Mexico, a reversal in some of the temporary factors that constrained growth in 2013, such as lower effectiveness in spending by the new government versus the first year and homebuilding issues, should aid growth in 2014.
The full report 'Brazil and Mexico: What Corporates Are Saying in Q4' is available at 'www.fitchratings.com.'
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Brazil and Mexico (What North
American Corporates Are Saying in Q4)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=738604
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