MEXICO CITY.— Mexico will grow less than the average for Latin America (LA) at the end of this year and in 2025, according to updated projections from the International Monetary Fund (IMF).
The 1.5% estimated for 2024 is below the 2.1% expected for the region, according to the World Economic Expectations (WEO) published by the IMF this Tuesday.
The new estimate for Latin America represents an improvement of 0.3 percentage points, but a cut of 0.7 points for Mexico compared to last July’s report.
By 2025, while The Mexican economy will experience a slowdown to 1.3% With a downward adjustment of 0.3 percentage points, Latin America and the Caribbean as a whole will advance 2.5%, that is, 0.2 percentage points less than previously forecast.
Furthermore, the IMF highlighted that in Mexico and Brazil, solid wage growth can prevent disinflation fastest in the service sector.
The same thing happens in Colombia, due to meteorological phenomena, and in Chile with increases in regulated electricity rates, he noted.
Mexico will grow less than the Latin American average in 2025: IMF
In this regard, the financial advisor and director of the Monetary and Capital Markets department, Tobias Adrian, He said that, although he would not speak about the specific case of Mexico and the future interest rate adjustmentsIn general, emerging markets focused on inflation and credibility have proven to be very powerful.
At a press conference where he presented the World Financial Stability Report, he explained that the above becomes necessary to generate economic stability in the face of internal and external shocks.
Within that context, he noted, central banks take into account both local and foreign aspects in their decisions, keeping in mind a medium-term horizon, and their convergence to return towards the goal they set.
“That has proven to be quite successful, the large emerging markets, we see an improvement in monetary policy,” he said.
For his part, deputy director of the Department of Monetary and Capital Markets, Jason Wu highlighted that have seen large emerging markets that went through that cycle with reasonable resilience in general terms by focusing on the fight against rising consumer prices.
“Now we are on the opposite side of the cycle with interest rate cuts,” he said.
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Latin America economic outlook 2024
**Interview with Economic Analyst Dr. Laura Gonzalez**
**Editor:** Welcome, Dr. Gonzalez. Thank you for joining us today to discuss the latest IMF projections for Mexico’s economy. The report suggests that Mexico’s growth will lag behind the Latin American average in 2024 and 2025. What are your initial thoughts on these findings?
**Dr. Gonzalez:** Thank you for having me. It’s concerning but not entirely surprising. The IMF has projected Mexico’s growth at 1.5% for 2024, compared to 2.1% for the broader Latin American region. This gap indicates underlying issues in Mexico’s economy that need to be addressed, especially as we approach the next fiscal year.
**Editor:** The report mentions a downward adjustment for Mexico’s growth estimates. What do you believe has contributed to this situation?
**Dr. Gonzalez:** A few factors are at play here. Firstly, there is the impact of strong wage growth in Mexico, which, although beneficial for workers, could lead to persistent inflation, particularly in the service sector. Additionally, external pressures such as supply chain disruptions and global economic conditions are also influencing our growth trajectory.
**Editor:** Interesting point. The IMF also noted that certain countries, such as Colombia and Brazil, are facing inflation difficulties due to various factors, including meteorological events and regulated prices. How does this context affect Mexico?
**Dr. Gonzalez:** We’re seeing a similar pattern in terms of inflationary pressures. High wages and price increases, especially in sectors like energy, are contributing to the challenge. Mexico must balance wage growth with productivity improvements to mitigate these inflationary risks. If we can’t manage this, it could further hamper economic growth.
**Editor:** What should policymakers focus on to support Mexico’s economic growth moving forward?
**Dr. Gonzalez:** Policymakers need to enhance productivity and innovation in key sectors, invest in infrastructure, and implement effective monetary policies to control inflation. Additionally, we must address structural issues within the economy that have historically hindered growth. Prioritizing these areas could help narrow the growth gap with our Latin American neighbors.
**Editor:** Thank you, Dr. Gonzalez, for your insights on this critical economic issue. We appreciate your time today.
**Dr. Gonzalez:** Thank you for having me. It’s always a pleasure to discuss our economy and its future.