The International Monetary Fund (IMF) projected Mexico’s growth will slow markedly in 2024 and 2025, in part due to capacity constraints, fiscal consolidation and lower growth in the United States, but the energy sector limits opportunities and benefits and It may represent the relocation of supply chains, a phenomenon known as nearshoring.
“We see bottlenecks in some areas and energy is one of those, infrastructure in general terms, is something that is a limitation today in Mexico to be able to take more advantage of the opportunities it has with nearshoring and other possibilities,” said the Director of the Western Hemisphere Department of the IMF, Rodrigo Valdés.
In a press conference to talk about the economic prospects of the Latin American and Caribbean region, within the framework of the Annual Meetings of the IMF and the World Bank, he indicated that although the Mexican government is working to resolve these bottlenecks and The IMF fully supports it, there are limitations that have to be aligned.
In its report, the IMF explained that after good growth in 2023, activity in Mexico has slowed in recent quarters, and despite the expansive fiscal policy, the slowdown in exports to the United States and the restrictive orientation are expected to of monetary policy limit growth in 2024 to around 1.5%.
By 2025, the slowdown is expected to continue up to 1.3%, due to the planned fiscal adjustment and a less favorable external situation, although the greatest details will be given in next year’s Economic Package, the IMF director assured that “there is always the “the possibility of having income mobilization at some point and we see that as very important, that there are steps towards consolidation.”
In this sense, the international organization warned that the 2025 budget, scheduled for mid-November, has to provide a credible consolidation plan to meet medium-term fiscal goals and maintain fiscal sustainability.
He added that in Mexico it is expected that the gradual relaxation of the current restrictive monetary policy, but a reduction in the output gap and lower credit growth will help inflation return to the Bank of Mexico’s goal by the end of 2025.
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