Best’s Special Report: Mexico’s Economy Facing Uncertain Future

OLDWICK, N.J.--(BUSINESS WIRE)-- Mexico’s economy has benefited from a favorable economic environment in the United States and strong domestic demand, but is facing several potential headwinds to growth, according to a new AM Best special report.

The Best’s Special Report, titled, “Uncertain Times for Mexico, Latin America’s Second Largest Economy,” states that Mexico’s new president, Andrés Manuel López Obrador, has instituted policies that have been met with mixed responses. The 2019 budget largely has been viewed positively; however, his plans to hold additional public referendums have been less well-received. Uncertainty surrounding his policies and the implications those policies hold for businesses have the potential to dampen business and consumer sentiment and could result in a decline in foreign direct investment, which could drag future growth. The International Monetary Fund estimates Mexico’s GDP growth at 2.0% for 2018, and projects GDP growth of 1.6% in 2019 and 1.9% in 2020.

The financial and currency markets likely will continue to experience heightened levels of volatility throughout the year, owing to ongoing global growth concerns, and unpredictable government policies that may dent investor sentiment. Monetary conditions have also tightened in recent years, due largely to currency depreciation, higher interest rates in the United States and inflation levels higher than the central bank’s target. Other concerns for growth include the government’s plans to cut private sector involvement in the oil sector and an increase the government’s contingent liabilities, which could diminish its fiscal position and constrain fiscal spending. Although AM Best maintains a stable outlook on Mexico’s insurance industry, these factors could create volatility in the operating performance of Mexico’s insurers.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=285163.

AM Best will be hosting a networking event with a brief Latin America market overview to mark the five-year anniversary of its Mexico-based subsidiary at Habita Hotel in Mexico City, on Thursday, May 9, 2019, beginning at 6 p.m. CDT. There is no charge for this event. To attend or for more information, please visit the event registration page or email [email protected].

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20190502005783/en/

Ann Modica
Economist, Credit Rating
Criteria, Research & Analytics
+1 908 439 2200, ext. 5209
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
[email protected]

Source: AM Best

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