The Mexican economy is solid and recent data published by Inegi is related to poor performance of the primary sector, said President Claudia Sheinbaum after the IMF adjusted downward its forecasts for the country’s GDP.
“There is a slight decline in the primary sector, mainly in agriculture, which is associated with the years of drought we are experiencing, it is not something that represents a structural or other type of problem,” he noted.
The international organization reduced its economic growth prospects for Mexico, from 2.2% to 1.5% for 2024, and from 1.6% to 1.3% for 2025, and also warned of the risks posed by the reform of the Judiciary.
In the second quarter, GDP grew 1% at an annual rate and 0.2% compared to the previous period, and the primary or agricultural sector fell 2.5% and 0.2%, respectively, according to seasonally adjusted figures from the statistics institute.
Read: IMF cuts estimate of Mexico’s GDP in 2024; warns about reforms
“Next year agricultural production will grow, both because of the irrigation works carried out by President López Obrador, and because there are better conditions in most of the country. But the economy is solid, it is good, and there is a part in the quarter related mainly to the primary sector for this reason,” the president said at a press conference on the occasion of the Mexico-United States CEO Dialogue.
However, in the 2024 Article IV Mission’s final staff statement, the IMF explained that activity in Mexico is slowing despite an expansionary fiscal stance, in part due to binding capacity constraints and a stance of restrictive monetary policy (high interest rates).
It warned that weaker-than-expected growth in the United States, an increase in global risk aversion and the unforeseen effects of recent constitutional reforms could affect production in Mexico.
Risks of the reform of the Judiciary
The IMF added that the recent judicial reform generates significant uncertainties about the effectiveness of the execution of contracts and the predictability of the rule of law, since the replacement of judges at different levels next year will create a new source of uncertainty that may affect private investment decisions.
“It is essential that this reform be implemented in a clear and predictable manner that guarantees the independence and professionalism of the Judiciary and strengthens the rule of law. The current personnel baseline does not incorporate the possible obstacles derived from these uncertainties,” he promoted.
Recommends better targeted regulation and public investments
The international organization mentioned that the current restructuring of global value chains offers the Sheinbaum government an important opportunity to deepen the already strong economic ties with the United States; However, taking advantage of these prospects requires a broad set of supply-side reforms that complement the solid and well-established institutional framework for macroeconomic policies.
In addition, regulatory reforms, better targeted public investments that further alleviate infrastructure bottlenecks, broader access to financial services, and a more predictable supply of energy and water would support private sector-led growth.
Other priority measures include governance reforms that address corruption and fight organized crime.
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