Mexico Resilient to US Crisis: S&P

S&P does not expect Mexico’s sovereign ratings to be affected by the downturn in the US and the resulting deceleration in GDP growth in Mexico. “The combination of macroeconomic stability, the development of domestic capital markets, and the timely approval of tax reform in 2007 should sustain market confidence and the current sovereign ratings during a period of sluggish economic growth in 2008,” says analyst Joydeep Mukherji. S&P expects Mexican GDP growth to decline to 2%-3% in 2008, depending upon the extent of the downturn in the US. Domestic demand should continue to spur the economy in 2008, even as net exports suffer due to US. FDI should also boost overall investment, even if it declines from the $23bn influx received in 2007, the second highest level received in Mexican history.