The Bank of Mexico (Banxico) improved its estimate of national economic growth, from a specific figure of 1.5% three months ago, to another of 1.8%; for 2025, the point forecast of 1.2% remained unchanged.
According to the “Quarterly Report, July-September 2024”, in this period, national economic activity exhibited a higher growth rate than that observed in the previous three quarters, in which marked weakness was recorded.
The economic performance during the third quarter of 2024 reflected increases in the three large sectors of economic activity, but the greater dynamism of industrial activity was mainly derived from a certain improvement in the performance of manufacturing, although tertiary activities have continued. showing heterogeneous behavior between its sectors.
Banxico highlighted that in the July-August 2024 two-month period, private consumption reversed the contraction registered in the second quarter of the year, while gross fixed investment expanded compared to the second quarter, although at a lower growth rate than those observed. in the first three quarters of 2023.
Furthermore, in the July-October period, the average dollar value of manufacturing exports increased compared to the second quarter of the year.
In the third quarter of 2024, the economy’s sources of financial resources continued to exhibit robust expansion. Internal financing to the private sector continued to grow, although at a slower pace compared to the dynamism it showed in 2023.
Likewise, information collected through surveys suggests that the reconfiguration of global supply chains has contributed to the increase in demand for bank financing in Mexico in the last two years, especially among large companies.
However, during the July-September 2024 period, labor market indicators presented mixed behavior. On the one hand, unemployment rates remained at low levels; On the other hand, job creation slowed down.
Risks
In this context, Banxico pointed out that the risks to the central scenario for the growth of economic activity remain biased downward and are related to the possibility that the growth of the United States economy will be lower than expected.
Other risk factors are related to the probability that the current environment of uncertainty related to the external policies that could be implemented or to idiosyncratic factors will intensify, and that the reduction in public spending resulting from the announced fiscal consolidation will have a greater effect on the economic activity and that the various geopolitical conflicts have an adverse impact on the global economy.
Other risk factors are that episodes of volatility materialize in international financial markets and that meteorological phenomena adversely impact national economic activity.
Inflation
Due to the pressures that have affected non-core inflation, the current forecast for headline inflation presents upward adjustments in the short term compared to the previous Report. However, general inflation is still expected to converge to the 3% target in the fourth quarter of 2025.
The main risks for inflation are: persistence of underlying inflation given the magnitude, scope and duration of the shocks that have been faced; that the national currency shows greater depreciation; increased cost pressures that could be passed on to consumer prices; climatic effects that could impact the prices of various agricultural products; and an escalation of geopolitical conflicts or changes in trade policies.
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