Wednesday, September 17, 2025

Lack of coherence in public policy among issues affecting investors’ appetite

A lack of public policy coherence is undermining investor confidence and will hold back economic prospects through mid-to-late 2020, the ratings agency Moody’s says in a new report.

Entitled Hesitant Investment, higher costs and trade tensions undermine Mexico’s growth prospects, the report said that concern about the government’s economic policy direction has lessened investors’ appetite to invest in the country.

“We forecast that Mexico’s real GDP growth will slow to 1.2% in 2019 and 1.5% in 2020, down from 2% in 2018, amid persistently weak private investment and a tight fiscal stance,” said Moody’s assistant vice president Sandra Beltran.

“Anxiety over economic policy has dampened investor sentiment and gross fixed investment remains relatively stable but has weakened, particularly for foreign direct investment,” she added.

The report said that higher wages will pose credit risks for a number of Mexican companies through 2020 and beyond and that environmental, social and governance risks will also increase.

“New laws granting greater freedom of association and collective-bargaining power to unions would further increase cost risks in labor-intensive industries such as automotive and mining,” Moody’s said.

Further threats to companies operating in Mexico that will also dissuade new investment include higher electricity costs, trade tensions and weaker domestic consumption.

“Exporters may face stress from trade uncertainties . . .” the report said.

Moody’s also cited the August Bank of México survey, which showed that 72% of private sector financial experts who were consulted by the central bank believe that it is currently a bad time to invest in Mexico.

Moody’s assessment of Mexico’s sovereign rating is currently at investment grade A3, higher than the other two major ratings agencies.

However, it cut its outlook to negative in June, which indicates that there is a one in three chance that a downgrade will follow.

Source: El Economista (sp) 

Have something to say? Paid Subscribers get all access to make & read comments.
mural honoring Alicia Matías

A mural at explosion site in CDMX honors Alicia Matías, who died saving her granddaughter

1
The 49-year-old heroine's death has been met with an outpouring of admiration while the nation mourns the 15 victims of last week's gas tanker explosion.
Sheinbaum waving the Mexican flag from the National Palace during the annual Grito de Independencia

In first ‘Grito’ as president, Sheinbaum honors Mexico’s heroines of Independence

10
Josefa Ortiz Téllez Girón, Leona Vicario, Gertrudis Bocanegra and Manuela Molina were all included in Sheinbaum's first presidential Grito, or Cry of Independence.
Culiacan

Threats of violence cancel ‘Grito’ celebrations in Sinaloa and Michoacán 

1
Mexico City's Iztapalapa borough will also forego celebrations out of respect for the deceased and injured in last week's gas explosion.
BETA Version - Powered by Perplexity