Published On: Wed, Aug 3rd, 2016

Mexican economy absorbing external shocks: Moody’s

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MEXICO CITY—Mexican economic growth faces headwinds from global market volatility, government spending cuts and higher local interest rates, although the country is fairly well equipped to handle shocks such as lower oil prices and higher U.S. interest rates, Moody’s Investors Service said Wednesday Aug. 3.

“Gross capital flows to emerging markets have started to revert in 2016; although the trend change has been gradual in the case of Mexico, external volatility continues to weigh on growth,” the ratings company said in a report quoted by The Wall Street Journal.

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A flexible exchange rate, foreign reserves around $177 billion and a recently renewed flexible credit line with the International Monetary Fund leave Mexico relatively well positioned to manage external shocks, Moody’s added.

Moody’s rates Mexico A3, a notch higher than Fitch Ratings and Standard & Poor’s, but changed the outlook to negative at the end of March after the slump in oil prices cut into government revenue and strained the finances of state oil company Petróleos Mexicanos.

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Source: wsj.com

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