Latin America’s governments, businesses, and infrastructure have less financial flexibility to deal with the current El Niño phenomenon than when it hit the region hard in 2016, according to a report released by Moody’s.
The arrival of El Niño is pointed out as one of the causes of the high temperatures registered in some countries of the region, which experts also attribute to the effects of climate change.
“The short-term impact of the new El Niño on GDP growth will depend on its severity, and the long-term effects will depend on damage to roads, schools, and hospitals,” the rating agency said in a report.
According to Moody’s, the phenomenon affects South America’s natural resource industries the most, especially the agricultural and mining sectors, and would delay infrastructure development “with mixed credit consequences for hydroelectric generation and electricity prices.”
“Its impact on rainfall patterns in Latin America varies by region, causing droughts, fires, and floods and disrupting production in some areas while supporting energy and agricultural production in others,” Moody’s said.
El Niño causes droughts in northern Brazil, Colombia, Panama, and other parts of Central America, as well as heavy rainfall in Pacific coastal countries such as Ecuador and Peru, as well as northern Bolivia and Chile, southern Brazil, Argentina, and Paraguay, he added.
“If the phenomenon were strong, it would compromise the ability of agriculture, livestock, fishing, and mining borrowers to repay bank loans,”
Moody’s added.
In early July, the World Meteorological Organization said that according to its forecasts, temperatures will continue to rise in much of the world after the appearance of the El Niño weather phenomenon in the tropical Pacific for the first time in seven years.
