Mexico: Financial Sector Assessment Program-Technical Note on Climate Risk Analysis
IMF Staff Country Reports, December 8, 2022
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- Mexico: Financial Sector Assessment Program-Technical Note on Climate Risk Analysis
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Bibliographic details
- Published: December 8, 2022
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400226403.002
Executive summary and key findings
- Mexico is exposed to both transition and physical risks from climate change.
- Mexico’s total energy supply is dominated by fossil fuels and non-renewable energy sources.
- Mexico is the second largest emitter of greenhouse gases (GHG) in Latin America.
- Emissions are highly concentrated in a few economic sectors that play an important role in the Mexican economy.
- The Mexican financial sector has sizable exposures to these emission intensive sectors.
- The transition to a low carbon economy raises challenges for the economy and financial sector that need to be considered.
- Mexico is exposed to a range of physical risks, including:
- acute risks associated with floods and tropical cyclones, due to exposure to both the North Atlantic and Eastern Pacific hurricane basins;
- droughts;
- heatwaves; and
- chronic risks.
Scope and classification
- Publication type: IMF Staff Country Report (Country Report No. 2022/360).
- Publication date: December 8, 2022.
- Pages: 59.
- Volume: 2022.
- Issue: 360.
- Series: Country Report No. 2022/360.
- DOI: https://doi.org/10.5089/9798400226403.002.
- Stock No: 1MEXEA2022008.
- ISBN: 9798400226403.
- ISSN: 1934-7685.
Subject areas and keywords
- Subject: Climate change; Credit risk; Environment; Financial regulation and supervision; Greenhouse gas emissions; International organization; Monetary policy; Natural disasters.
- Keywords: Banco de México; Climate change; Credit risk; Global; Greenhouse gas emissions; macro-Financial Impact; Mexico FSAP; Natural disasters; Transition policy scenario; WB staff.
Implications highlighted
- Concentration of GHG emissions in a few key sectors implies macro-financial vulnerability concentrated by sector.
- Sizable financial-sector exposures to emission-intensive sectors mean that transition policies and shocks could have material impacts on credit risk and financial stability.
- Physical climate hazards (floods, tropical cyclones, droughts, heatwaves, and chronic risks) present both acute and chronic threats to economic activity and the financial sector, amplified by Mexico’s geographic exposure to two hurricane basins.
International Monetary Fund. Mexico: Financial Sector Assessment Program-Technical Note on Climate Risk Analysis (IMF Staff Country Reports 2022, 360), December 8, 2022.
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