Photo: Deposit Photos

By KELIN DILLON

According to big three credit rating agency Moody’s, Mexico is poised to enter an era of weakened financial stability at the beginning of the next six-year presidential term.

While Mexico is expected to pull in 3.3 percent economic growth in 2023 due to investments and domestic consumption, the growth is expected to slow to 2 percent in 2024, said Moody’s Sovereign Analyst Ariane Ortiz-Bollín.

Ortiz-Bollín pointed to double-digit interest rates, the slowdown of Mexico’s major trade partner the United States, a new federal executive and monetary policy delays as reasons behind 2024’s 2 percent growth estimate.

Other driving factors behind this financial decline include the high expenses of state-owned oil company Petróleos Mexicanos (Pemex) and pension payments, which account for 1 percent and 4 percent of Mexico’s gross domestic product respectively.

“Fiscal accounts will start from a weaker point than six years ago, some of these fiscal pressures are going to be a much more complicated policy challenge for the next administration,” added Moody’s senior analyst Renzo Merino.

Mexico is also expected to reach a 5.3 percent economic deficit in 2024, the second-highest level for any country with a Moody’s credit rating of Baa2.

In 2024, Mexico’s financial burden is predicted to stand at 16 out of every 100 pesos, in comparison to the 7 to 8 out of every 100 pesos burden carried by other Baa2 counties.

In light of these analyses, Merino said the sustainable financial plan of the upcoming presidential administration will be paramount to strengthen Mexico’s financial standing.