The economic outlook for Mexico in 2024 has taken another hit as private sector analysts have once again downgraded their growth expectations. According to a recent survey conducted by the Bank of Mexico (Banxico), specialists now predict that the nation’s Gross Domestic Product (GDP) will grow by just 1.6 percent in 2024, marking the fifth consecutive downward revision this year. This adjustment represents a 20-basis point drop from the previous forecast, reflecting growing concerns about the lack of economic dynamism in recent months.
Steady Decline in Growth Projections
The beginning of 2024 was met with optimism as experts anticipated a GDP growth rate of 2.4 percent. However, as the months have passed, these expectations have gradually diminished. The first downward revision occurred in April, when the forecast was cut to 2.25 percent. This was followed by further reductions in May (2.1 percent), June (2.0 percent), and July (1.8 percent). Now, as September begins, the forecast has been adjusted to 1.6 percent, painting a bleak picture for Mexico’s economic future.
Looking ahead to 2025, the outlook remains concerning. The consensus among the 39 analysts surveyed by Banxico suggests that Mexico’s GDP will grow by only 1.5 percent, a slight decrease from the previous estimate of 1.61 percent.
Exchange Rate and Inflation Concerns
The ongoing volatility of the peso has also led analysts to revise their estimates for the exchange rate. The forecast for the peso’s value at the end of 2024 has been adjusted to 19 units per U.S. dollar, up from the previous estimate of 18.78 units. For 2025, under the anticipated administration of Claudia Sheinbaum, the forecast has been further adjusted from 19.40 to 19.60 units per dollar. This reflects the market’s reaction to political developments, particularly the reform to the Judicial Branch, which is set to be debated in the Chamber of Deputies.
Inflation, another key economic indicator, is expected to remain a challenge. Analysts now predict that headline inflation will close 2024 at 4.64 percent annually, up from the previous forecast of 4.58 percent. However, the outlook for core inflation has slightly improved, with predictions being revised down from 3.97 percent to 3.90 percent annually.
Interest Rates and Governance Concerns
Banxico’s interest rate has been a focal point for economic forecasts, and specialists are now predicting further cuts. The interest rate is expected to close 2024 at 10.25 percent, with a more significant reduction anticipated in 2025, where the rate could drop to 8.25 percent.
Governance issues are seen as a significant impediment to Mexico’s economic growth over the next six months. According to the Banxico survey, 57 percent of analysts identified governance as a key factor that could hinder growth, with 21 percent specifically citing internal political uncertainty—a concern that has reached its highest level since May 2021.
Investment Sentiment at a Low
The perception of Mexico’s economic environment has taken a hit, with a growing number of experts expressing pessimism about the current climate for investment. A striking 63 percent of those surveyed believe that it is a “bad time” to invest in Mexico, the highest rate since October 2022. An additional 26 percent were uncertain, while only 11 percent felt that it was a “good time” to invest.
Looking ahead, the business climate is also expected to worsen. A majority of 71 percent of analysts predict that the business environment will deteriorate over the next six months, mirroring sentiments from the previous survey. This marks the highest level of pessimism since June 2020, during the height of the COVID-19 pandemic. Only 24 percent believe the business climate will remain unchanged, and a mere 5 percent expect improvement.
The economic outlook for Mexico in 2024 has taken another hit as private sector analysts have once again downgraded their growth expectations. According to a recent survey conducted by the Bank of Mexico (Banxico), specialists now predict that the nation's Gross Domestic Product (GDP) will grow by just 1.6 percent in 2024, marking the fifth consecutive downward revision this year. This adjustment represents a 20-basis point drop from the previous forecast, reflecting growing concerns about the lack of economic dynamism in recent months.
