S&P omits El Niño effects on ratings

The article relates to Standard & Poor's Global expectations regarding the impact of the El Niño phenomenon on sovereign credit ratings. The chief analyst explained that the phenomenon would only lead to a downgrade if it were unusually severe or if governments took costly supportive measures. The impact depends on the scale of natural disasters such as droughts and floods, as well as governments' ability to manage the repercussions through appropriate fiscal policies. The agency pointed out that economies with flexible currencies, such as Colombia and Peru, might be more capable of adapting, while countries that use pegged currencies like the dollar, such as Ecuador, have fewer tools to deal with shocks. Political response is the main factor determining how much the phenomenon will affect ratings, with current expectations indicating no significant decline, although uncertainty remains about the future extent of El Niño's impact.

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