Adjustment in Growth Projections for Mexico's Economy by Banxico
The Bank of Mexico (Banxico) adjusted its growth expectations for the Mexican economy this Wednesday. The central bank now predicts that GDP will grow by 1.8%, up from the 1.5% it had projected in August. "After three quarters of notable weakness in economic activity, a higher GDP growth rate was recorded in the third quarter of 2024, surpassing what was anticipated in the previous report," Banxico emphasized.
However, these projections are more cautious than those presented by the Ministry of Finance in the Economic Package for 2025, which estimates growth between 2% and 3%. Even though Banxico has raised its forecasts, the risks remain on the downside. Among the concerns mentioned by the bank is that, despite the growth being shown by the U.S. economy, it could be lower than expected, negatively affecting Mexico's external demand. The bank also highlights that any increase in uncertainty related to U.S. trade policies and other internal factors could adversely impact external demand, as well as consumption and investment in Mexico. For 2025, Banxico maintains its projection that the economy will grow by 1.2%, while for 2026 a 1.8% expansion is expected. "Expectations for 2025 also include lower dynamism in private investment compared to previous projections, due to uncertainty stemming from internal and external factors. On the other hand, greater public spending is considered in the General Criteria for Economic Policy (CGPE) 2025 compared to what was previously forecasted," it added. Regarding formal employment, the news is not as optimistic: Banxico estimates that the creation of formal jobs in 2024 and 2025 will be lower, projecting between 250,000 and 350,000 jobs during this year, in contrast to the range of 410,000 to 550,000 that was previously estimated in August.
It’s important to note that while the projections indicate a slight rebound in growth, the outlook remains uncertain. The Mexican economy will need to navigate the risks associated with the global economy and internal political tensions. Investing in optimal sectors and diversifying income sources will be key to mitigating potential negative impacts in the future.
