ISTANBUL

Fitch Ratings said Thursday it affirmed Mexico's long-term foreign currency issuer default rating at BBB- with a stable outlook.

Mexico's rating is supported by "a prudent" macroeconomic policy framework, stable and robust external finances and government debt-to-GDP that Fitch projects would remain below the 'BBB' median, the agency said in a statement.

The country's rating, however, is constrained by weak governance indicators, a muted long-term economic growth performance and fiscal risks related to contingent liabilities from state-owned petroleum company Pemex, and rising budget rigidities, it added.

"We do not expect any changes to the government's willingness to financially support Pemex during (Claudia) Sheinbaum's administration," said the statement.

The newly-elected Sheinbaum administration has expressed its intention to maintain Pemex's dominant position in the Mexican oil market -- upstream and downstream, it added.

Fitch said it projects Mexico's real GDP growth slowing to 2% in 2024 from 3.2% in 2023, before further declining to 1.8% in 2025. "We anticipate economic activity to pick up for the rest of this year following a weaker economy during the first quarter."

The agency said it expects a combination of a slower US economy, a tighter fiscal stance as the new administration takes office and restrictive monetary policy will result in a slight slowdown in economic growth next year.

It said the November election in the US is "a source of uncertainty" for Mexico with former President Donald Trump's stated intention of imposing a universal tariff of 10% on all imports.

"Increased trade tensions in such a scenario could leave Mexico vulnerable, given that 80% of its exports are destined for the US," said the statement.

"Immigration will remain a point of friction between the two countries, and a material curb could affect remittance flows into Mexico, 3.5% of GDP in 2023," it added.