MEXICO CITY (El Universal).— BBVA México joined the financial entities that reduce their growth forecasts for the current year and 2025, due to lower investment, a restrictive scenario due to high interest rates and uncertainty due to the approval of judicial reform.
In his report “Mexico Situation”, the chief economist of the financial institution, Carlos Serrano, explained that by 2024 a growth in the Gross Domestic Product (GDP) of just 1.2% is expected, from a previous estimate of 2.5%, with indicators clear signs of lower manufacturing activity that has been reflected in a drop in job creation.
By 2025, the main financial institution that operates in the country estimates a growth of the Mexican economy of 1%, but warned that it could be lower if uncertainty does not decrease due to the recently approved judicial reform.
“It will be 1% as long as the uncertainty generated by the reform of the judicial system is mitigated, because if it is not mitigated through changes in secondary laws and positive messages, we believe that growth may be even lower next year. that is coming,” said the specialist.
Serrano highlighted that if there is no greater certainty regarding investments next year, a scenario of even recession is expected in the country.
“It is not our base scenario, but we cannot rule out a recession because if the judicial reform generates uncertainty among investors, we could see a negative shock to investment,” he said.
Consumption declines
Serrano said that consumption is decreasing in the country, an indicator that BBVA México measures from the use of credit cards and other financial products with its customer base, in addition to less construction due to the progress of former President López’s flagship projects. Obrador.
Likewise, the institution considered that Banxico’s current monetary policy continues to be very restrictive, even above other emerging countries that make up the OECD, thus reiterating that the central bank has room to continue reducing its reference rate.
In that sense, he said that by the end of 2024 an inflation of 4.8% is expected and by 2025 it is already within the objective of the Bank of Mexico (Banxico).
Thus, it is expected that at the end of the year the reference rate will be 10% and reach 7.5 in 2025.
Deficit alert
The BBVA Mexico economist highlighted that reducing the fiscal deficit will be the main challenge for President Claudia Sheinbaum, which this year will close at 5.9% according to estimates by the Ministry of Finance.
“The challenge for the beginning administration will be important and complicated, because in 2024 we will have the highest deficit since the late 90s. The great challenge we have is to lower the deficit to more sustainable levels,” said the financial analyst.
According to the agency, between January and August the difference between federal income and spending amounted to 897,874 million pesos, the highest for the same period in 34 years.
BBVA is just one more of those who do not expect a good future, at least for now, for the economy.
Economic expectations Factors to review
Increasing revenue is one of the goals for this six-year term, analysts say.
Collection models
Serrano stressed that it is necessary to review the country’s fiscal framework, in order to increase revenue by combating informality and tax evasion, in addition to changing Pemex’s business model, with greater private participation and reducing losses in its refining activity.
Tax consolidation
“If medium-term fiscal consolidation is not achieved, what we think is that towards the end of the six-year term the debt could be 60% of GDP, and then we could lose the investment grade,” he said. The institution expects Mexico to maintain investment grade these two years.
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