MEXICO CITY (AP) .- “Concerns about potential conflicts of Andrés Manuel López Obrador’s political priorities could undermine market confidence, in a context where signs of an economic slowdown in Mexico are evident”, Moody’s stated.
This could depress, even more, the investment towards Mexico, as well as deteriorate the image of the country.
After the National Institute of Statistics and Geography (Inegi) reported that the economy contracted 0.2% in the first quarter of the six-year term of AMLO, the rating agency said that things could get even more complicated.
“Lower growth resulted in lower tax revenues than expected in January and February, and in response the government cut spending (…) because they want to maintain their goal of fiscal deficit of 2.1% of GDP, “the agency explained.
“In addition, in an update of the budget presented in April, the authorities said that a lower growth of the economy, would reduce government revenues by 0.5% of GDP, so that government spending would be reduced in the same proportion, to avoid a new debt “, the statement said.
“The Mexican economy grew only 0.61% and 0.25% in the last two quarters of 2018, but talking about the first of quarter of 2019, the economy contracted 0.2%. And, because the government promised not to increase or create taxes, the fundraising scenario is not favorable for the country of Mexico”, Moody’s analysts continued.
“In this context, pro-cyclical measures by the authorities could very likely exacerbate slow growth and undermine business and investment possibilities”, Moody’s statement concluded.