Mexico is the Latin American and Caribbean economy where poverty reduction has accelerated the most in recent years, the World Bank (WB) reported. It also announced its outlook for zero growth for the country this year and 1.1 percent in 2026.
In a preview of its Latin American and Caribbean Economic Report (LACER), the organization showed that Mexico recorded the largest decline in poverty from 2018 to 2023, a decrease of approximately 7 percent, the largest in the region.
This decline, according to the WB study, was due to social transfer programs, but almost three times as much to the increase in labor income, especially among the lowest earners.
The World Bank showed that the decline in poverty in the country was largely the result of improved labor markets and was accompanied by an average increase of 6 percentage points in real wages. However, the informal private sector predominates in the country, adding to this little progress in productivity.
One day after the International Monetary Fund (IMF) reported that, according to its projections, the Mexican economy will decline 0.3 percent this year and see a rebound of 1.4 percent next year, the World Bank released its own adjustments.
Similar to the IMF’s report, the World Bank sees Mexico as one of the worst growth scenarios for this year in Latin America and the Caribbean. Except for Haiti, which would see a 2.2 percent reduction in its gross domestic product (GDP), the Mexican economy is headed for zero growth, the lowest in the region.
In the LACER forecast, the organization indicated that Latin America will grow 2.1 percent this year and 2.4 percent in 2026, making it the region with the lowest growth globally.
Low investment, high debt, and a changing external environment are major obstacles to the region’s development, the World Bank noted.
Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean, emphasized that the global economic landscape has changed dramatically, marked by increased levels of uncertainty. In this context, countries must pursue strategies and reforms that boost productivity and competitiveness, while addressing persistent gaps in infrastructure, education, trade, and governance.
Nearshoring: Uncertain, but Not Dying
According to data collected by the organization, no country in the region is as dependent on exports as Mexico, as they account for more than a quarter of its GDP. Different productive sectors are tied to them, depending on the destination. For example, more manufactured goods are shipped to the United States, while sales to China are composed primarily of minerals and fuels.
Amid global uncertainty, driven by changing trade policies, the organization recommends that all countries diversify their trade destinations and expand service exports.
“The nearshoring project is not necessarily dead, although it is certainly much more uncertain. With major Asian competitors facing heavy tariffs, Mexico and Latin America and the Caribbean in general appear more attractive,” explains Lacer.
Source: jornada
