BBVA Warns That Judicial Reform Could Undermine the Rule of Law in Mexico

19:00 11/09/2024 - PesoMXN.com

BBVA's research department stated on Wednesday that the recent reform to the Judiciary could weaken the rule of law in the country. The bank noted that this reform would lead to a more arbitrary application of the law, which could negatively impact Mexico's economic outlook.

Before these changes, the economy was projected to grow less than 2% in 2025, and inflation was expected to reach 3.5% annually for the same year, the financial institution highlighted. BBVA's projections indicate that the Bank of Mexico (Banxico) will continue to lower interest rates, which would increase the risk for the country. "The current situation requires a rise in risk premiums in the future. Rating agencies take both quantitative and qualitative factors into account, and the approved reforms could result in a negative outlook for Mexico or at the very least raise the risk of a downgrade in its credit rating," they warned. BBVA emphasized that while reforms are necessary in Mexico, especially to combat corruption and impunity, the proposed changes could be more harmful than beneficial.

The uncertainty accompanying reforms like these can deter both domestic and foreign investment, impacting long-term economic growth. It is crucial that any changes to legislation are implemented with caution and consideration to avoid adverse effects that could worsen the country's economic situation.