Fitch: Low growth and higher public debt burden pressure Mexican credit profile

Eren Sengezer FXStreet

In its latest report, International ratings agency Fitch, revised the Mexico's foreign and local currency rating outlook to negative from stable in December 2016, while affirming its long-term ratings at 'BBB+'.

More headlines from the report:

Mexico's relatively weak economic growth and increased downside risks to its growth outlook and the challenges this could pose for public debt stabilization are driving Mexico's Negative Outloo
Mexico's five-year growth of 2.5% is weaker than the 'BBB' median of 3.1%, and this could continue in 2017-18 as investment takes a hit due to greater economic uncertainty
The ultimate extent of potential spill-overs from U.S. policies on Mexico will become clearer only when more details as to the scope and content of the changes to trade and immigration matters become available.
A drop in foreign direct investment could make financing the current account deficit more dependent on portfolio flows and external borrowing.
A deterioration in Mexico's links with the U.S. that dampens its growth prospects and/or weakens its external balance sheet would be negative for the ratings.
On the other hand, improved growth performance and successful fiscal consolidation that improves the outlook for the public debt trajectory, as well as reduced risks of disruption to trade and financial flows to Mexico will help stabilize the Outlook.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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