The International Monetary Fund (IMF) has forecast a slowdown in Mexico’s economic growth, projecting a modest expansion of around 1.5% in 2024, citing capacity constraints and tight monetary policy. According to a report from Reuters, the IMF expects growth to decelerate further to 1.3% in 2025 for Latin America’s second-largest economy, as inflation nears the central bank’s target of 3%.
Mexico’s central bank, Banxico, recently lowered its benchmark interest rate to 10.5% in a split decision, reflecting expectations of easing inflation. However, minutes from the meeting revealed concerns that inflation risks remain elevated. The IMF echoed these sentiments, highlighting potential challenges such as weaker economic performance in the U.S., heightened global risk aversion, and unforeseen impacts from recent reforms.
Despite these concerns, President Claudia Sheinbaum expressed confidence in the strength of Mexico’s economy, underscoring expected growth in agricultural production next year. She also downplayed the IMF’s concerns over recent constitutional reforms, assuring that none of them would hinder investment in the country. The reforms, which include changes to the judiciary such as the popular election of judges and magistrates, have sparked controversy, raising concerns from key trade partners like the U.S. and Canada, as well as protests from within Mexico’s judicial system.
The IMF, however, cautioned that the judicial overhaul could create uncertainties regarding contract enforcement and the rule of law, posing risks to the investment climate. These concerns come at a time when Mexico’s economic outlook is closely tied to its relationship with major trading partners.
