Dec 1 (Reuters) - Four Central American economies hit hard
by two hurricanes last month will likely suffer lasting damage
as "climate-related shocks" reverberate through vulnerable
agricultural markets, credit ratings agency Moody's said on
Provoking massive flooding and deadly mudslides across a
broad swath of Central America, Iota was one of the strongest
storms on record to strike Nicaragua when it hit land in
November. At the time, the small country and region were still
reeling from the impact of Hurricane Eta two weeks earlier.
The four Central American economies hardest hit are
Nicaragua, Honduras, El Salvador and Guatemala.
"The two storms have wrought significant physical damage to
the agriculture-reliant economies and will compound existing
fiscal and economic challenges for the sovereigns, which are
already in the midst of deep recessions as a result of the
coronavirus pandemic," Moody's Investors Service said in a note
Vulnerability to extreme weather events underscores the
region's "exposure to climate change risk," the statement added.
On average, Moody's sees Central American economies
shrinking by more than 6% this year, but then expanding by 4% in
Moody's forecasts wider fiscal deficits and higher debt both
this year and next across the region.
Nicaragua, the most agriculture-dependent economy, is
especially vulnerable to further climate shocks, according to
the note, and appeared to be hardest hit by the back-to-back
Their combined impact is expected to "magnify existing
credit pressures on lower-rated sovereigns like El Salvador and
Nicaragua." Less severe credit pressures will likely be faced by
Honduras, and to an even lesser extent, Guatemala.
El Salvador, meanwhile, was relatively spared due to its
distance from the Caribbean coast, where the hurricanes struck,
but still suffered significant farm-sector damage, with as much
as a fifth of its coffee crop put at risk, according to Moody's.
(Reporting by David Alire Garcia: editing by Drazen Jorgic and