Economy15 hours previously (Jan 21, 2022 08: 05PM ET)
© Reuters. FILE PHOTO: Mild poles are pictured without energy at some level of an outage in Mexico’s electrical energy network, in Ciudad Juarez, Mexico February 15, 2021. REUTERS/Jose Luis Gonzalez
(Reuters) – Mexico faces risks to economic enhance and probably for a credit ranking rating downgrade in the medium term from political traits including the likely passage of a controversial energy bill, JP Morgan mentioned in a portray.
Basically based on the financial institution, President Andrés Manuel López Obrador’s opinion to tighten dispute withhold watch over of the electrical energy market would possibly presumably well additionally trigger sovereign debt rating downgrades from Fretful’s (NYSE:) and Customary & Dreadful’s. U.S. Energy Secretary Jennifer Granholm raised concerns in regards to the hazards to traders from the capability market initiative at some level of talks with Mexican officials this week.
The JP Morgan portray, dated Thursday, careworn that the capability bill became as soon as liable to drag at some level this yr, even when in watered-down produce. The opposition PRI occasion would possibly presumably well additionally strengthen the laws, doubtlessly fragmenting the opposition to Lopez Obrador.
The bill’s approval would possibly presumably well additionally enable Lopez Obrador to develop the capability of the presidency and undercut the roles of just institutions and regulators, JP Morgan economist Gabriel Lozano wrote in the portray.
As well to to the bill’s passage, Lopez Obrador is liable to ranking a take grasp of from gubernatorial victories for his Morena occasion apart from his possess anticipated take grasp of in a take referendum scheduled for April 10, Lozano mentioned.
In contrast backdrop, he expects the Mexico Central Monetary institution to take grasp of passion charges to 7.25% this yr and to eight% in 2023 from the most well liked 5.5% level.
“If there are some doubts on whether or no longer Banxico (Mexico Central Monetary institution) would possibly presumably well additionally tranquil advise the Fed at some level of 2023 or no longer, this yr’s political events will doubtlessly dictate the extent of the coupling, ” the financial institution mentioned.
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