Latin America & Fed tightening: risks revisited

Several economies in Latin America have large current account deficits that could leave them vulnerable as and when the Fed starts to raise interest rates. The risks in Brazil are, by now, well known. But external positions in Colombia and Peru have also deteriorated markedly over the past couple of years. Chile is the only economy in the region where current account vulnerabilities have fallen since the 2013 “Taper Tantrum”.