DBRS on Dec. 21 confirmed its ratings on Mexico, saying that the country's credit fundamentals remain intact despite a challenging external environment that has dampened its recent growth performance.

DBRS confirmed Mexico's long-term foreign and local currency issuer ratings at BBB (high) and A (low), respectively, and its short-term foreign and local currency issuer ratings at R-1 (low). The trend on all the ratings is stable.

The country's economy expanded only 2.3% in 2014 and 2.6% in 2015, with growth expected to decelerate to 2.1% in 2016, the rating agency noted.

The economy has been hit by a series of external shocks, as manufacturing exports have performed poorly over the last two years amid weak industrial production in the U.S., while investment has been negatively affected by budget consolidation and uncertainty surrounding the U.S. election.

Meanwhile, primary deficits, the depreciation of the Mexican peso, and the assumption of pension liabilities from state-owned entities have led to a substantial increase in public debt. The country's public debt-to-GDP ratio rose to an estimated 56% in 2016 from 43% in 2012.

However, the government's "strong policy framework is facilitating a relatively smooth adjustment to less favorable global conditions, the fiscal consolidation plan is proceeding gradually and on schedule, the banking system remains well-capitalized, and structural reforms passed under the Peña Nieto administration should boost growth over the medium term," DBRS said.

The primary risk to Mexico's growth outlook stems from the threat of protectionism, as U.S. President-elect Donald Trump has suggested that he would renegotiate or withdraw from the North American Free Trade Agreement, impose tariffs on Mexican imports, and penalize U.S. companies that shift operations south of the border, DBRS added.