Latin America: fall in oil prices will cut growth by -0.4pp

Euler Hermes estimates that dramatically lower oil prices at 64USD/barrel in 2015 will negatively impact Latin American trade and fiscal balances by respectively -0.7% and -0.5% of GDP; shaving -0.4pp from regional real growth. Consequently, real GDP should slow down to around +0.5% in 2015, against +0.9% estimated for 2014.

Chile and Central America (Group #1) will be "The winners" as they are net oil importers, while Brazil, Argentina, Peru and Bolivia (Group #2) are likely to be "Neither hot or cold", as their oil fiscal and external accounts are broadly balanced. For Colombia, Mexico and Trinidad and Tobago (Group #3), where the oil sector remains key, the spillover of the "rough times ahead" to the real economy should be bearable thanks to significant reserves accumulated over past years.

Ecuador and Venezuela are special cases. The fall in oil price might reduce growth by -2pps in Ecuador, triggering a reboot of the economic model.

Venezuela will be the biggest loser with the current account shifting into a deficit and real growth being cut by over -3pps, widening the Venezuelan recession to -7.5% in 2015, at least.