Fitch Mexico confirms credit rating but forecasts the economic recession

Fitch estimates have confirmed Mexico’s sovereignty credit rating at a very low investment level level, while the Mexican economy is predicted this year.

“Fitch Rates have confirmed the default estimate of Mexico’s long-term foreign currency provision (IDR) with a standard perspective on ‘PPP-‘, ”New York-based credit rating company a Report Wednesday.

Fitch said the Mexican economy is expected to shrink 0.4% this year.

Mexico’s credit rating PPP- Why?

PPP- is 10 Best Sovereign Loan Rating provided Fitch. So the top of Mexico is nine runs below the AAA rating.

In countries with AAA rating with Fits – referring to the lowest expectation of default risk – include Switzerland, Germany and Australia. America’s rating AA+, the second highest level.

In a PPP assessment, Mexico’s default risk is parallel between India and other countries with Greece.

Fitch said Wednesday “The assessment of Mexico supports a sensible economic policy structure, strong external finance and its large and diverse economy.”

Mexico’s assessment said that “disabled long -term growth, weak management indicators, low -income base and budget hardness are controlled by financial challenges and a series of loans of Pemex.”

A Report published on WednesdayMexico’s Finance Ministry illustrates that Mexico has an investment standard rating, “with eight evaluating companies that assess its debt.”

The situation added that “guarantees favorable access to international financial markets,” the ministry added.

Fitch predicts the recession on the horizon

Mexico “is particularly vulnerable to US trade defense, because for decades, coordination has made export to its northern neighbors into a major location of the economy (27%of GDP by 2024).

“The fees already imposed (in Mexico) In particular, may have significant impacts AutomotiveAnd the uncertainty weighs the function, ”the rating company said.

Fitch said the final “rule” of the Mexico-American trade relationship would be at least clear until the USMCA contract was reviewed in mid-2016. ”

“Even if the US payment policy defends Priority therapy to Mexico We see blurred opportunities associated with competitors’Nearest Shoring‘As long as this uncertainty lasts, “it said.

In that context, the Mexican economy predicts that the economy will shrink 0.4% by 2025, “the fees, the uncertainty of the fees, the uncertainty, the financial changes and the recession of the United States.”

If the Mexican economy is contracting, it will be the first recession after 2020 Mexico’s GDP fell 8.5% Due to Govid infection and its associated restrictions. The economy increased by 1.5% by 2024But the last quarter of the year was contracted on a continuous basis.

Fitch acknowledged that the current economic outlook is “uncertainty and a new trade relationship with the United States.”

“For now, we expect that in 2026 a normal 0.8% recovery because the economy continues to digest fees and the US growth is soft,” it said.

Fitz’s forecast for the Mexican economy in 2025 varies sharply with the International Monetary Fund and the World Bank, which predicts a growth of 1.4% and 1.5%, respectively. However, the two predictions were made in January before US President Donald Trump imposed fees for importing from Mexico.

For its part, Mexico’s Ministry of Finance recently predicted The Mexican economy will expand 1.5-2.3% this year.

Other highlights of Fitz’s statement

In a Mexico report released on Wednesday, Fitch estimates commented on the central government Plan a Mexico Economic initiativeTax collections and other issues.

Mexico project

Plan Mexico said, “The government is trying to improve growth opportunities, and the financial resources defined with the participation of the private sector via a state -led model,” Fitch said.

“New is new Energy lawFor example, it improves the primary companies, but introduces new methods for alliance with the private sector, ”it said.

Fitch is not clear how much private sector hike is … Reforms to change the judiciary And Eliminate Autonomous Regulatory Settings. ”

Mexico’s financial status

Fitch said that “increased social spending, public mega-plans.” Maya Railway Trail .

The Mexican government is aimed at reducing the requirements of public borrowing this year to 3.9% of the GDP this year, and the “austerity measures) in the” major cuts “and priority in the” mega cuts “and priority areas (health, education and safety) for capital costs.”

Tax collection

Fitch believes that the Mexico government created by US charges and fees threats is “achieving the financial goal this year.”

This indicates that the tax collection increased by 10% annually in the first two months of 2025, despite “economic activities stagnant”.

High -tax return ”from certain actions of recession and potential gains (eg, e.g. Tax on e-commerce), Cost cuts are on the path. ”

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