S&P Watchdog on Debt and Fiscal Deficit in Mexico

S&P Global Ratings announced on Tuesday that it foresees Mexico maintaining a prudent macroeconomic management over the next two years, although it warned of possible hurdles for the second-largest economy in Latin America, particularly regarding trade with the United States. The close trade ties between Mexico and the U.S. could face challenges due to potential new tariffs during the upcoming presidential term of Donald Trump and the review of the North American Free Trade Agreement (USMCA) scheduled for 2026, noted Joydeep Mukherji, managing director of Sovereign Ratings at S&P.

Mukherji also emphasized that the agency could downgrade its current "BBB" rating for Mexico if debt and fiscal deficits worsen, and that it is closely monitoring the additional fiscal support to state-owned oil and energy companies, like Pemex and CFE. A deterioration in investor confidence and low investment could also jeopardize the rating, he explained. On the flip side, effective political and financial management under the new administration of President Claudia Sheinbaum, who took office on October 1, could lead to a positive reassessment of Mexico’s rating, Mukherji added.

It is crucial for the Mexican government to implement clear and effective strategies to ensure economic stability and investor confidence. Prudent fiscal management, coupled with policies that promote investment, would not only help maintain the credit rating but could also stimulate economic growth and job creation in the country. Undoubtedly, the Mexican economy is at a critical juncture, and the decisions made during this period will shape its future path.