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Fitch Lowers Mexico's Sovereign Ratings

Fitch Ratings downgraded sovereign ratings of Mexico as the economy is set to enter a severe recession this year due to the economic shock caused by the coronavirus pandemic.

The agency lowered the credit ratings to 'BBB-' from 'BBB', one notch above the junk status. The rating outlook remained 'stable'.

The economy is forecast to shrink at least 4 percent in 2020. Fitch noted that the extent of the economic contraction and scope for recovery starting the second half of 2020 will be dictated by prospects in the U.S., Mexico's main trading partner, as well as the duration of the virus shock domestically.

Moreover, consolidating public finances after the crisis and returning debt/GDP to a sustainable path will prove challenging.

Nonetheless, the credible monetary policy framework built around a flexible exchange rate and inflation targeting remains a rating strength and will help the economy absorb the external shock, while minimizing current account external imbalances, said Fitch.

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