Fitch Ratings maintains Mexico's rating with a stable outlook: strengths and challenges in the economy

The agency Fitch Ratings has confirmed Mexico's credit risk rating at 'BBB-' with a stable outlook, highlighting that this decision is based on a prudent macroeconomic policy framework, stable external finances, and a public debt/GDP ratio projected to remain below the 'BBB' median. Despite these favorable aspects, the rating agency has warned about certain risks affecting the country's institutional profile, especially regarding the package of reforms proposed by President Andrés Manuel López Obrador. According to Fitch, the reforms proposed by the Mexican president could negatively impact the country's institutional framework, although they emphasize that it is too early to assess the seriousness of these measures before their approval and implementation. This uncertainty adds to the weakness in Mexico's governance indicators, with a score below the established median for the 'BBB' rating. In fiscal terms, Fitch projects a government general deficit that will remain at concerning levels in the coming years, reflecting uncertainty about the incoming government's ability to reduce this deficit to sustainable levels. Additionally, a gradual increase in government debt is expected, reaching 52.8% of GDP by 2026, although it will remain below the 'BBB' category median. Regarding Petróleos Mexicanos (Pemex), the rating agency does not anticipate significant changes in the financial support provided by the government to the state-owned company. The incoming administration has expressed its intention to maintain Pemex's dominant position in the Mexican oil market, which will require ongoing federal transfers unless the company improves its operational efficiency or reduces its debt burden. In the economic sphere, Fitch projects a slowdown in Mexico's real GDP growth, decreasing from 3.2% in 2023 to 2% in 2024 and 1.8% in 2025. While economic recovery is expected throughout the year, the medium-term outlook is less optimistic, which could have implications for the country's financial and fiscal situation. In summary, Fitch Ratings' confirmation of Mexico's rating with a stable outlook reflects both strengths and challenges for the Mexican economy. While positive aspects of macroeconomic policy and external finances are acknowledged, concerns exist regarding governance, fiscal risks, and the implementation of reforms that could impact the country's credit profile in the future. The uncertainty about the government's ability to address these challenges poses a scenario of ongoing monitoring and analysis by investors and financial analysts.