Latin American economies, although resilient against the credit crisis as compared to their global peers, are facing the effects of the global economic downturn and falling commodity prices – critically important in a region where, according to World Bank estimates, over 90% of the population depends in some way on commodity exports. The region is expected to face sharp deceleration in growth this year but sentiment was strong at the recent World Economic Forum meeting in Brazil, where participants highlighted the potential for growing relationships with the Middle East and Asia and the relative strength of regional companies, which remain challenged but not distressed.

The effect on political risk is not conclusive. Over the past year, S&P Transfer & Convertibility ratings were downgraded in two countries while they improved in four and saw three new additions to their monitoring list. Also, regional instances of government actions have caused some concern among investors and analysts have highlighted the possibility for increased populist economic policies as elections coincide with the negative economic environment.