The IMF lowers its growth estimate for Mexico to 2.2% in 2024

According to the IMF’s World Economic Outlook for July, the lower outlook for Mexico is due to a moderation in demand.

“As far as Mexico is concerned, we have revised down our forecast for this year a bit to 2.2%, but this follows from very strong growth last year of 3.2% when we saw strong nonresidential construction investment and an expansion in manufacturing activity, which was largely also responding to demand from the US market, but some of that is fading or becoming less pronounced and also reflects the slowdown in the United States,” explained Petya Koeva Brooks, Deputy Director of the IMF’s Research Department.

Regarding inflation, she said that in Mexico it has stabilized since mid-2023, although as in other countries, a more rigid inflation of services is observed and wage increases are playing a role, but overall Koeva considered that the stance of monetary policy is appropriate and inflation is expected to return to the target at the end of 2025.

As for growth in Latin America and the Caribbean, it has been revised downwards to 1.9% for 2024 and 2.7% for 2025.

The global economy is expected to grow modestly over the next two years thanks to a slowdown in activity in the United States, a recovery in Europe and increased consumption and exports in China.

The IMF warned in an update to its World Economic Outlook (WEO) that momentum in the fight against inflation is slowing, which could further delay interest rate cuts and keep the dollar under strong pressure on developing economies.

The world economy will grow slowly

The IMF kept its forecast for global real gross domestic product growth for 2024 unchanged at 3.2% from April, and raised its forecast for 2025 by 0.1 percentage point to 3.3%. The forecasts fail to lift growth from the lackluster levels that IMF Managing Director Kristalina Georgieva has warned would lead to “the tepid twenties.”

But the revised outlook reflected some reversals among major economies, with the U.S. growth forecast for 2024 cut by 0.1 percentage point to 2.6%, reflecting slower-than-expected consumption in the first quarter.

The US growth forecast for 2025 was kept unchanged at 1.9%, a slowdown driven by a cooling labor market and spending moderation in response to tight monetary policy.

With information from Reuters.