Fitch forecasts fragile boost for Central American economies

The credit ratings agency Fitch Ratings contends that the improvement of the U.S. economy and low oil prices could improve credit ratings throughout Central America.

In addition to more potential capital flowing in from a healthier U.S. economy, falling oil prices will benefit the region's oil importers who could take the economic torch from commodities exporters who have enjoyed a decade of robust business.

Fitch also warned, though, that the boost would only carry countries so far on its own and that real positive gains would be decided by each country's handling of the uptick.

“Economic recovery in the U.S. could generate positive spillovers for the region due to strong linkages in terms of remittances, exports, tourism and foreign direct investment," Head of Fitch's Latin America Sovereign Team Shelly Shetty said. “How countries use the tailwinds to re-build buffers and policy space and improve competitiveness through reforms will be key for credit trends in the region.”

The only country with a negative outlook was Costa Rica. Fitch said the closing of an Intel plant there would outweigh any of the other market conditions. El Salvador and Guatemala were included among the countries with favorable ratings, though Fitch said that ongoing crime and a limited workforce made growth tentative in those countries.

Fitch's overall forecast for regional growth was 4.7 percent through 2017.

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