To BNP, Mexico Is Too Optimistic About Growth as Debt Balloons

10/28/16 Bloomberg

4350685550_dbd28c7e50.jpgMexico’s economic projections are way too rosy for BNP Paribas SA. Marcelo Carvalho, an economist at the bank, says Mexico will grow by just 1.5 percent in 2017, the weakest in five years. It’s well below growth of as much as 3 percent forecast in a budget approved by lawmakers last week.

Carvalho isn’t alone. Economists at Barclays Plc to Nomura Holdings Inc. are concerned that Mexico’s longer-term growth estimates may also be unrealistic, threatening to undermine the government’s pledge to stem a debt spiral. S&P Global Ratings and Moody’s Investors Service have already placed their credit ratings for Mexico on negative watch, citing rising indebtedness.

 “A combination of slower growth, higher interest rates, and fiscal disappointment is not good for the debt dynamics and could increase chances of a rating downgrade,” said BNP’s Carvalho.
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