Mexico Quarterly Update – November 2019

Mexico's economic growth has turned negative due to external and internal short-term disruptions. Political and policy uncertainty continues to delay investments while tight credit conditions are choking private consumption. More monetary easing is expected in coming months, however the trade/investment outlook remains open-ended and is a source of risk aversion. Life and motor premiums have begun to moderate but overall growth remains close to historical rates. A worsening in the combined ratio was offset by stronger investment results in the first half of the year.

Key takeaways:

• The Mexican economy is now contracting due to tight credit conditions as well as political and policy uncertainty.
• Inflation pressures have subdued, further monetary easing is expected by the end of the year.
• Downside risks prevail and we have lowered our growth projections.
• Premium growth would begin to moderate due to the broader economy softness.
• A worsening in the combined ratio was offset by a betterment in the investment results.