Annual economic growth will slow in Mexico in both 2024 and 2025, according to the Organization for Economic Co-operation and Development (OECD).

The 38-member intergovernmental organization published five different “macroeconomic projections” in its Economic Surveys: Mexico 2024 report, which OECD Secretary-General Mathias Cormann presented in Mexico City on Tuesday. The forecasts are outlined below.

GDP growth

The OECD is forecasting economic growth of 2.5% this year, which would be 0.7 percentage points below the 3.2% result in 2023. It predicted that Mexico’s exports will decline this year as a result of a slowing of the United States economy.

The OECD’s 2024 growth forecast is 0.3 percentage points lower than that of the Bank of Mexico (Banxico), which anticipates a 2.8% expansion.

The Paris-based organization is predicting the Mexican economy will grow just 2% in 2025. Banxico is even more pessimistic, forecasting that GDP will grow by just 1.5% next year.

Unemployment

Mexico’s unemployment rate hit a record low of 2.6% in December and averaged 2.8% across 2023. As the economy slows, the OECD anticipates that unemployment will creep up.

It is forecasting a 3% rate at the end of this year, and a 3.1% rate in late 2025.

Inflation  

The OECD is forecasting a headline inflation rate of 4.1% at the end of 2024 and 3.2% at the end of next year.

The core inflation rate, which strips out volatile food and energy prices, will be 4.2% at the close of 2024 and 3.2% at the end of next year, according to the organization’s projections.

The headline rate in the first half of February was 4.45%, according to official data published last week, while the core rate was slightly higher at 4.63%.

Government debt as a percentage of GDP 

The OECD predicts that public net debt as a percentage of GDP will increase to 48.7% this year from 46.8% in 2023. It predicts that the figure will fall ever so slightly to 48.6% in 2025.

Mexico News Daily