IMF Predicts Mexico's Growth Will Slow to 1.5%

The International Monetary Fund (IMF) has projected that Mexico's economic growth will slow to around 1.5% this year and is expected to fall to 1.3% by 2025. The IMF's revised forecasts were released on Friday and indicate that the country's economic expansion is being hampered by factors such as capacity constraints and tight monetary policy.

The IMF emphasized the need for a comprehensive set of reforms to achieve sustainable and inclusive growth in Mexico, which is the second-largest economy in Latin America. These remarks came after the IMF approved a two-year flexible credit line worth approximately $35 billion for Mexico.

Despite an increase in government spending, the IMF pointed out that there has been a slowdown in private sector consumption and investment, along with a decrease in job growth. Looking ahead, the IMF expects that economic growth will become even more moderate in 2025 due to the reduction of fiscal incentives and the impact of a slowdown in the U.S. economy.

Concerns over inflationary pressures appear to be easing. The IMF foresees that ongoing monetary tightening, combined with slowing economic activity, will help bring inflation down to the 3% target set by the Bank of Mexico (Banxico) by 2025.

Additionally, the IMF predicts that Mexico’s government budget deficit will significantly increase this year, and that gross public sector debt is expected to rise to 58% of GDP by the end of 2024.