DBRS Morningstar on Dec. 19 confirmed Mexico's long-term foreign- and local-currency issuer ratings at BBB (high) but changed the trend to negative from stable.
"Mexico's medium-term growth outlook has weakened, due largely to policy action by the [Andrés Manuel] López Obrador administration," the rating agency said, pointing to "poorly targeted infrastructure spending, reduced reliance on private capital, and less predictable policymaking," which could constrain investment and dampen productivity growth.
The negative outlook on Mexico was also based on concerns that increased public spending in the energy sector will leave the government with "fewer resources to address its core objectives of reducing poverty and improving economic opportunity."
In order to return to a stable trend, Mexico needs to revitalize its reform agenda to attract investment and stabilize its public debt trajectory by reaching its primary surplus targets of 1% of GDP, DBRS added.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.