Economic Growth at Risk Due to Judicial Reform, Says BBVA
11:53 03/10/2024 - PesoMXN.com
BBVA Mexico has indicated that if the uncertainty regarding the judicial reform continues, the country's economy is expected to grow less than 1% in 2025. According to their estimates, this year growth is projected to close at 1.2%, and next year it could drop to 1%, unless the effects of the reform are managed effectively through changes in secondary laws and more favorable communication. This was stated by Carlos Serrano, chief economist at BBVA Mexico.
In a conference, Serrano highlighted three factors that are indicating a slowdown in the national economy. "There is no doubt that the Mexican economy is significantly slowing down," he assured. The three reasons mentioned are as follows: first, a decrease in public investment due to reduced spending on flagship projects like the Maya Train and the Dos Bocas refinery, as well as a weakening in private investment caused by the uncertainty generated by the judicial reform. This reduction in investment is reflected in a labor market that, although still creating jobs, is doing so at a slower pace than in previous years. "The unemployment rate in Mexico is relatively low, even below the historical average of 2.7%. Generally, the country does not experience high unemployment rates; why? Because there is an informal sector that absorbs the loss of formal jobs," he noted. The second factor affecting the economic slowdown is low activity in U.S. manufacturing, which directly impacts Mexican manufacturing. Lastly, there is a restrictive monetary policy that also influences this scenario.
The current situation of the Mexican economy underscores the importance of having clear and stable policies. Uncertainty can be a real brake on growth, both in public and private investment. It is vital that the government sends clear signals that foster confidence and promote a more favorable business environment, as in these types of scenarios, a proactive approach is key to maintaining economic sustainability.
