Financial challenges in Mexico under the leadership of Claudia Sheinbaum: Fitch Ratings' mixed diagnosis.

The Mexican economy, on the threshold of a new administration led by Claudia Sheinbaum, receives a mixed diagnosis from the credit rating agency Fitch Ratings. Despite inheriting a stable economy, the mayor with a leave of absence from Mexico City faces the challenge of a fiscal deficit that has reached concerning levels. According to Fitch, the fiscal deficit in 2024 has exceeded 5% of the Gross Domestic Product (GDP), marking its highest point in over three decades. The outlook presented is complex, with a significant increase in the fiscal deficit compared to previous years. This imbalance is attributed to several factors, including an increase in social spending, higher debt servicing costs, and the completion of infrastructure projects initiated by the previous administration. These conditions have created a challenging fiscal situation that will require concrete measures from the new government for correction. One of the critical points the incoming administration faces is the need to consolidate public finances and reduce the deficit to sustainable levels that do not compromise long-term economic stability. Fitch warns that government debt could reach 48.8% of GDP in 2024, representing an increase of 3.2 percentage points. Uncertainty persists regarding the strategies that will be implemented to reverse this trend and ensure a stable debt-to-GDP trajectory. Another aspect adding pressure to the country's financial situation is the ongoing support for Pemex, the state-owned oil company. With debt equivalent to nearly 6% of GDP, Pemex represents a significant contingent liability for the Mexican government. The need to address this situation effectively adds to the economic challenges facing the new administration. Despite these challenges, Fitch highlights that Mexico has solid macroeconomic institutions and a stable environment that can provide some support amid financial difficulties. The unemployment rate remains at record levels, and inflation is converging towards the target range set by the Bank of Mexico. Additionally, the resilient economic growth of the United States is projected to be a favorable factor for the Mexican economy, although high interest rates could impact credit growth. In the nearshoring sphere, it is expected that the Mexican economy will continue to benefit from this trend, although the economic and trade policies of the new administration could influence the country's attractiveness as an investment destination. In this context, the challenge for Claudia Sheinbaum and her team will be to find a balance between fiscal consolidation, economic growth, and attracting investments that drive the country's development in a globally competitive environment.