year-on-year growth in the second quarter of 2021 was 22.0 %, but the figure is forecast to fall to 10.9 % in the third quarter and 6.6 % in the fourth quarter, due in part to the rapid recovery of trade in the last two quarters of 2020. Only 0.8 % quarter-on-quarter growth averaging 0.8 % each quarter in the second half of this year, equivalent to an annualized rate of 3.1 %, is needed to meet the forecast for 2021.
Indeed, debt issuance in the international markets by the region continued to rise and, in the first ten months of 2021, increased by 12.3 % compared to the same period in 2020, although this time with greater prominence of private debt and lower growth in sovereign issuance. Non-bank private sector issuance grew by 77 %, while sovereign issuance increased by 14 %, after experiencing strong dynamism in 2020.
Trade volume growth is expected to be accompanied by market-weighted GDP growth of 5.3% in 2021 and 4.1% in 2022 (instead of the 5.1% and 3.8% previously forecast).
The recovery in financial flows has, however, been accompanied by a deterioration in credit ratings in several countries in the region, with 12 credit rating downgrade actions in 2021, in addition to downward outlook revisions for almost all countries in the region, as well as a slight increase in sovereign risk, which even so still remains well below the figures recorded during much of 2018 and 2019.
Balance of financial flows to the region
The income balance deficit, on the other hand, increased in 2021 mainly due to higher profit remittance by foreign investment companies, in a context of rising commodity prices. As a result of the aforementioned trends, after exhibiting a small surplus in 2020 (0.2 % of GDP), the current account of the balance of payments turned into a deficit again in 2021 and stood at 0.6 % of GDP.
Growth dynamics in 2021 were led by domestic demand. Private consumption was a key driver and contributed around half of second-quarter growth. On the other hand, although exports grew significantly, the net external sector (exports minus imports)
Cumulative 12-month net portfolio capital flows to emerging markets and financial volatility in emerging markets, March 2011 to September 2021 (In millions of dollars)
2011
2012
2013
2014
2015
2016
2017
2019
2020
Sep
Mar
Sep
Mar
Sep
Sep
2018
Mar
Mar
Sep
0
Mar
-100
Sep
10
Mar
-50
Sep
20
Mar
0
Sep
30
Mar
50
Sep
40
Mar
100
Sep
50
Mar
150
Sep
60
Mar
200
Portfolio capital flows Financial volatility index in emerging markets
2021
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the International Monetary Fund (IMF), 2021 and Bloomberg LATIN AMERICA DIGITAL SIGNAGE MARKET RESEARCH REPORT • 2022
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