ECR: Which way next for Mexico?

Jeremy Weltman
Published on:

LatAm safe-haven ranking 2nd
Euromoney Country Risk score 62.11
Three-year score change 3.42
Implied default probability (1-year %) 0.12
Mexico has continued to find favour among risk experts in recent years and the country’s image as an investment destination is much improved, particularly since its risk rating surpassed Brazil’s last year.

On a score of 62 points and lying 37th on Euromoney’s global risk rankings, the sovereign is closing in on tier-2 status, pointing to a future upgrade of its triple-B credit rating. At the heart of Mexico’s improving risk profile is a more stable and consensus-seeking political approach that is encouraging risk experts to raise their scores for government stability, as well as the regulatory and policymaking environment under the presidency of Enrique Peña Nieta, who has been working congenially with opposition parties to pass legislation since 2012. All five of Mexico’s economic risk indicators have enjoyed a rising score trend on the back of an expanding middle class driving a consumer boom, as well as improvements in educational standards and structural reforms boosting cost efficiencies. Removing entry barriers to private investment in oil, gas, electricity and telecoms sectors has bolstered Mexico’s global competitiveness, alongside the benefits of its highly productive maquiladora manufacturing base enjoying duty free access to the US market and solid economic growth.