Judicial reform puts caution on investments, warns private sector

In June, gross fixed investment registered a monthly drop of 1.0%, compared to the same month last year, investment grew by only 0.7%, its lowest growth since March 2021, according to figures from the National Institute of Statistics and Geography (Inegi). “But even more worrying is that just two months earlier it was showing double-digit annual growth,” added the CEESP.

He explained that investment is rapidly weakening after the surprising rebound that it had starting in December 2022, driven, to a large extent, by the need to finish the federal government’s flagship projects on time, while private investment also showed favorable expectations.

However, following the gradual completion of government projects and recent growing political uncertainty, investment momentum has deteriorated significantly and rapidly, he noted.

“It is clear that the business environment is rapidly deteriorating due to political uncertainty. Growth expectations continue to be adjusted downwards and the factors of greatest concern are concentrated in governance issues,” says the weekly report of the CEESP.

According to the results of the Survey on Private Sector Economics Specialists’ Expectations for August, the average forecast of specialists regarding GDP growth for this year was revised downwards again to 1.56%. Uncertainty extends to next year when the economy is expected to grow only 1.48%.

According to private sector specialists, domestic political uncertainty has become the main factor that could limit economic growth, followed by public security problems.

“In this context, there is clearly little confidence in the effectiveness of judicial reform, especially when concerns about other problems of lack of rule of law, corruption and impunity remain among the main factors limiting growth,” CEESP stressed.