Fitch Ratings ratifies Mexico maintains stable outlook

Fitch expects Mexico’s gross domestic product (GDP) growth to reach 3.4 percent in 2023, as well as slowing to up to 2.4 percent in 2024

The Fitch Ratings agency ratified Mexico’s sovereign rating at a level of ‘ BBB -‘ with a stable outlook, given a stable macroeconomic framework and fiscal discipline.

“The rating is limited by weak governance indicators, a record of moderate long-term growth performance, and fiscal risks related to increased budget rigidity and Pemex ‘s contingent liabilities,” the agency highlighted in a report.

Fitch expects gross domestic product (GDP) growth to reach 3.4 percent in 2023, as well as slowing to 2.4 percent in 2024.

From Fitch’s perspective, the Mexican economy will continue to benefit from the arrival of foreign companies, a phenomenon known as nearshoring, and from solid consumption among the population.

Likewise, he ruled out any economic impact due to the next presidential election period in 2024. On the political side, he specified, there could be a limited impact if Morena continues in power.

“ Fitch does not foresee a major political disruption during the electoral cycle that could negatively affect growth prospects for 2024. Fitch anticipates limited policy change if Morena wins the presidential election , although there is still limited visibility on the actual political agenda” , added the rating agency.

Rating agencies are private companies that evaluate the payment capacity of a company , government or country. Depending on their financial solvency among other economic factors, they issue a rating that serves as a reference for other entities.

In this way, the worse the rating of a government or organization, the more difficult it will be for it to access financing or it may be a creditor, but under very restrictive conditions.