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S&P downgrades Mexico’s rating and sees just 1% growth in 2026

MND Staff
By MND Staff
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Standard & Poor's cited low economic growth and public debt for its downgrading of Mexico's rating. (Shutterstock)

Standard & Poor’s (S&P) has downgraded Mexico’s rating from stable to negative, citing the risk of fiscal consolidation due to low economic growth and rising public debt.

The move, published in a report issued Tuesday, put the long-term foreign currency rating at ‘BBB’ and the local currency rating at ‘BBB+’.

CFE worker
S&P warned that the drain on the public treasury from the support of the Federal Electricity Commission (CFE) and Petróleos Mexicanos (Pemex) could negatively affect future ratings. (Presidencia/Cuartoscuro)

The financial rating agency acknowledged that Mexico’s institutional framework has fostered political stability for more than two decades, and enacted prudent fiscal policies, which together with a floating exchange rate have strengthened the country’s monetary flexibility.

However, “uncertainty” surrounding the renegotiation of the United States-Mexico-Canada free-trade agreement (USMCA) “weakens investor confidence,” which could lead to another downgrade due to unexpected setbacks in international trade, according to S&P. 

The Finance Ministry (SHCP) said that the new rating keeps Mexico within investment grade.

S&P forecasts just 1% economic growth for Mexico in 2026, due to uncertainty surrounding the USMCA review, low private investment and rising energy prices. The SHCP also lowered its growth forecast on Monday from 3% to 2.3%.

S&P stated that financial support for state-owned companies Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) could exacerbate Mexico’s fiscal rigidity and put pressure on its public finances.

“Pemex’s poor operating results could lead the government to provide more funds to cover future financial losses, which would worsen the fiscal deficit,” the report said. “We will continue to monitor the potential impact of the government’s ambitious infrastructure plans on Mexico’s deficits and debt trajectory.”  

The ratings agency said it may be forced to lower the rating in the next 24 months if Mexico does not reduce its fiscal deficit or if its trade relationship with the United States deteriorates.

Mexico’s ratings by other ratings agencies currently stand at BBB (Fitch), Baa2 (Moody’s) and BBB  (BBRS).

With reports from López-Dóriga Digital and El Financiero

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