Puerto Vallarta, Mexico – The World Bank has adjusted its growth forecast for Mexico, downgrading it to 2.3% from the 2.6% previously estimated in January. This revision comes as a result of the absence of anticipated investment influxes linked to the relocation of foreign companies’ plants and the hype over nearshoring.
William Maloney, the chief economist for Latin America at the World Bank, highlighted the disparity between anticipated Foreign Direct Investment (FDI) figures and actual investment in new manufacturing facilities. “If we look at the gross figures of Foreign Direct Investment and the announcements of investments in new plants, we are not seeing large increases or greater performance in the manufacturing sector,” Maloney stated.
The World Bank’s revised projection aligns closely with the market consensus, as reflected in the most recent Citibanamex survey, which stands at 2.4 percent. However, it falls below the lower threshold of the economic growth range forecasted by the Mexican Federal government in the Pre-Criteria 2025 report, which ranges between 2.5% and 3.5%. Additionally, it is beneath the 2.7% growth anticipated by the International Monetary Fund (IMF), with the IMF scheduled to update its global growth expectations on April 16.
During a virtual press conference unveiling the Latin American and Caribbean Economic Report (LACER), Maloney underscored Mexico’s significance as a potential indicator of nearshoring’s efficacy in fostering regional business expansion. Nearshoring involves the relocation of multinational companies seeking to safeguard their production and supply chains from geopolitical conflicts, often by moving closer to their target markets away from regions like China and Asia.
Addressing the ongoing diplomatic tensions between Mexico and Ecuador, Maloney emphasized the potential implications for investment sentiment. “The Bank, like other institutions, is carefully watching how it develops,” he remarked. While suggesting that the conflict may not directly impact Mexico’s economy, Maloney stressed that such events heighten uncertainty surrounding the general business environment, underscoring the importance of swift resolution for stability.
With the Spring Meetings approaching, Maloney highlighted the contradictory signals emanating from Mexico. Despite a surge in investment announcements, persistent barriers to investment remain, including challenges such as electricity and water shortages, coupled with a perceived lack of guidance for foreign investors navigating Mexico’s regulatory landscape.
Despite the downward revision in growth expectations for Mexico, World Bank experts anticipate the country will outpace the regional average, projected at 1.6% growth for the year. This marks the third consecutive year of Mexico surpassing the Latin American average performance, underscoring its resilience amidst prevailing economic challenges.
Puerto Vallarta, Mexico - The World Bank has adjusted its growth forecast for Mexico, downgrading it to 2.3% from the 2.6% previously estimated in January. This revision comes as a result of the absence of anticipated investment influxes linked to the relocation of foreign companies' plants and the hype over nearshoring.
