Key facts
- Mexico's financial system is resilient and solid.
- Risks in the financial system have marginally increased since December.
- Geopolitical conflicts, cyber issues, and climate events are flagged as potential risks.
- The banking system maintains strong capital and liquidity levels.
- Total financing of the non-financial sector reached 103.9% of GDP in Q1.
Mexico's financial system remains solid and capable of handling adverse situations, according to a report from the Bank of Mexico. The central bank noted that risks in the system have marginally increased since its December stability report, though strong capital and liquidity levels are expected to withstand shocks. Potential external risks identified include geopolitical conflicts, cyber issues, and climate events. Internally, the bank flagged a possible deterioration in economic growth outlook, higher-than-expected inflation, and a sovereign credit rating downgrade. Moody's Ratings recently downgraded Mexico's credit rating to Baa3 from Baa2, citing modest short-term economic growth forecasts. Total financing for Mexico's non-financial sector reached 103.9% of GDP in the first quarter, with over half concentrated in the public sector. Bank of Mexico governors anticipate a positive economic impact from the upcoming World Cup, with Deputy Governor Omar Mejia stating it would have localized and temporary effects, boosting tourism by an estimated $1.03 billion.