Navigating the Economic Crossroads: Mexico's Future Under Scrutiny

S&P Global Ratings anticipates careful macroeconomic management in Mexico over the next two years. Risks include U.S. trade relations, potential tariffs, and a 2026 USMCA revision. Current ratings could drop due to worsening fiscal deficits, while improved governance might boost Mexico's economic standing.

S&P Global Ratings has predicted Mexico will continue its cautious macroeconomic approach over the next two years. Despite this, several challenges could impact Latin America's second-largest economy, including evolving trade dynamics with the United States.

The two countries, heavily reliant on each other for trade, may face new barriers such as potential tariffs from U.S. President-elect Donald Trump and revisions to the North American USMCA free trade agreement in 2026. Joydeep Mukherji, the agency's Sovereign Ratings Managing Director, indicated that if Mexico's government debt and fiscal deficits worsen, its current 'BBB' rating might be downgraded.

Mukherji also noted that the agency is monitoring extraordinary support for state enterprises Pemex and CFE. On a positive note, if President Claudia Sheinbaum's administration demonstrates effective political and economic management, Mexico's rating could see an upgrade.

(With inputs from agencies.)