Mexico requires 2.4% GDP fiscal adjustment to stabilize debt, Moody's warns

Moody's Ratings has advised that Mexico requires a fiscal adjustment equivalent to 2.4% of its Gross Domestic Product (GDP) to stabilize its national debt. The agency noted that the projected fiscal balance for 2026 is weaker than what is necessary for debt stabilization, placing Mexico among the sovereigns with the highest needs for consolidation in Latin America.

Between 2019 and 2025, Mexico's debt increased by 14 percentage points of GDP. This situation is compounded by high rigidity in public spending, which includes interest payments, salaries, and social transfers. These mandatory or difficult-to-reduce items limit the government's ability to respond to economic shocks. Additionally, the agency highlighted that the federal government's obligation to share revenue with local governments restricts its capacity to strengthen public finances through increased tax collection.

Despite these fiscal challenges, reports from the Secretaría de Hacienda y Crédito Público indicate that the Mexican economy showed a solid recovery in the second quarter of 2026. The GDP grew by 1.5% compared to the previous quarter, driven by sectors such as manufacturing, construction, and services. The labor market also remains strong, with an unemployment rate of approximately 2.7%.