The Latin American region continues its deep structural transformation, with the potential to attract steady foreign direct and portfolio investment flows in the year ahead. However, the anticipated gradual process of normalization of monetary policy in the USA to be conducted by the Federal Reserve (Fed) has already opened the gates for rigorous differentiation amongst asset classes and sovereign credits. Scotiabank forecasts the systemically relevant countries of the region are aptly prepared (through manageable systemic leverage, well-capitalized banking sectors, adequate access to international credit and strong international reserves positions) to withstand any disrupting shifts in Fed policy the year ahead. Nevertheless, international credit agencies have delivered a message of caution regarding the erosion in fiscal and debt metrics in selected cases; indeed, market-sensitive rating agencies still maintain a “negative” outlook on sovereign credit ratings of Brazil, Mexico and Colombia whereas a “stable” outlook is enjoyed by both Peru and Argentina. The year ahead will see an improvement in growth dynamics within the Latin American economic landscape. Financial market trends have, over the past six months, anticipated an improving outlook for most countries in the region.[…]