Moody's Analytics warns that without deeper credit expansion, export growth becomes a matter of volume rather than development. The rating agency also issued a negative outlook for the Mexican banking sector due to a weak economy and increasing competition on the horizon. President Claudia Sheinbaum is calling for banks to lower their requirements to grant more credits to SMEs. Moody's analysis comes a month before the Convention, which will be held for the first time in the Mexican Caribbean this year, where President Sheinbaum will seek better results to achieve the goal of reaching 30% of SMEs by 2030. In recent days, the president stated that since the signing of the treaty last year, banks have increased credit to SMEs by one percentage point and called for elevating the effort to achieve a two-percentage-point increase this year. To accelerate this progress, the president announced she is seeking an agreement with banks to facilitate the required procedures for granting these credits, without putting the financial system at risk. However, the goal for the traditional banking sector in Mexico is also threatened by new banks awaiting their banking license, which could have more ease in granting credits. Almost a year after the agreement signed between bankers and the government to increase credit to small and medium-sized enterprises, Moody's has issued several warnings about meeting the goals and the challenges in the outlook for the banking sector. One of the central topics at this year's Banking Convention will be the review of the progress of this agreement, and according to an analysis by Moody's Analytics, credit restrictions remain a significant factor in the growth of the economy. According to the agency's analytics unit, productive bank credit for Mexican SMEs remains scarce, expensive, and short-term. A factor that explains the stagnation of the economy, despite the growth of exports.
