Mexico’s economic outlook continues to worsen. The International Monetary Fund (IMF) has revised downwards, for the third time, its growth forecasts for the Latin American country by 0.7 points for this year, placing it at 1.5%. In 2025, the cut is 0.3% compared to the previous report, in July, to set the Gross Domestic Product at 1.3%. In the World Economic Outlook report, published this Tuesday, the multilateral organization warns that the adjustment for the Mexican economy reflects the weakening of internal demand as a consequence of the adjustment of monetary policy and anticipates a greater contraction of GDP next year due to a more restrictive fiscal stance. The IMF forecasts are not fortuitous; they respond to some alerts that have already begun to be triggered internally: a slowdown in consumption, in job creation, the slowdown in foreign investment and uncertainty about the economic horizon due to recent structural reforms. The multilateral organization’s new forecasts are increasingly moving away from Mexico’s GDP growth of 3.2% in 2023.
For the rest of Latin America and the Caribbean, growth is projected to slow from 2.2% in 2023 to 2.1% in 2024, before rebounding to 2.5% in 2025. In Brazil, growth is projected at 3% in 2024 and 2.2% in 2025. This is an upward revision of 0.9 percentage points for 2024, compared to projections from last July. The regional forecast improves due to higher private consumption and investment in the first half of the year as a result of a tight labor market, government transfers, and less disruption than expected from the floods.
The IMF maintains its global growth forecast at 3.2% for this year, at the same level as in 2025, according to its forecasts. However, the Fund’s economists recognize geopolitical conflicts, protectionism, the possibility of slower growth in China and volatility in financial markets as possible downside risks. The organization points out that the world economy could experience a soft landing, however, it noted that the elections in the United States and worldwide have contributed to high levels of uncertainty, also adding that an increase in tariffs could increase trade tensions.
Another positive point in the IMF study is the downward trend in global inflation. In most Latin American and Caribbean countries, the rise in prices has decreased significantly from its peak levels and continues to show a downward trend. In line with this trend, the Fund expects Mexican inflation to fall from 5.5% in 2023 to 4.7% in 2024 and 3.8% the following year.
The repeated downward cuts to the forecast for Mexico’s Gross Domestic Product (GDP) reflect a slowdown in Latin America’s second largest economy. The forecasts for 2024 and 2025 are increasingly further away from the 3.2% growth in 2023. This new IMF downgrade is at the same level as the Bank of Mexico’s last downward adjustment. The central bank agrees that this year, Mexico will grow by 1.5%. Contrary to these forecasts, the Ministry of Finance remains optimistic about economic performance and outlines a GDP increase of 2.5 to 3.5% in 2024 and 2% to 3% in 2025.
The recent IMF forecasts are set against the backdrop of the start, this week, of the annual meetings between the organization and the World Bank. The director of the IMF, Kristalina Georgieva, declared in her traditional speech, prior to these meetings, of a “difficult future” due to the low growth and high debt of the economies. Throughout this week, both institutions will hold presentations and high-level meetings where ministers, central bank presidents and other economic authorities will participate.
Source: elpais
