Experts polled by the Bank of Mexico (Banxico) on Monday revised their GDP growth estimate for 2024 from 1.53% to 1.60%, while lowering the growth forecast for 2025 from 1.20% to 1.12%.
The estimates are based on results from a survey of 41 private sector specialists. While GDP growth is expected to fall in 2025, they predict it will increase to 1.8% in 2026.
The exchange rate
The survey provided several other financial outlooks. The analysts expect to close 2024 with an exchange rate of 20.25 pesos to the United States dollar. They reduced the rate outlook for 2025, from 20.59 to 20.53 pesos, and in 2026, from 21.23 to 21.00 pesos.
Inflation forecast
The analysts see inflation falling slightly by the end of 2024, from 4.42% to 4.37% for annual headline inflation and 3.69% to 3.6% for underlying inflation. This excludes the prices of volatile goods and services, including agricultural products, energy and government tariffs.
In 2025, the group anticipates headline inflation will average 3.8% and underlying inflation 3.72%, and in 2026, 3.7% and 3.6%, respectively. While some improvement is expected, projected inflation remains higher than the Banxico target of 3%.
Will the business climate improve or deteriorate?
When asked about the business climate in the next six months, 77% of those surveyed expected it to “get worse,” a slight improvement on the previous response rate of 79%. Meanwhile, 13% predicted it would “stay the same” and 10% said it would “improve.”
A slight majority — 59% of respondents — said it was a “bad time” to invest in Mexico, compared to 68% in the previous survey; 33% said they were “not sure” and 8% believed it was a “good time.”
FDI outlook
The anticipated foreign direct investment (FDI) for 2024 was revised downwards from previous estimates, from US $37.13 billion to $36.51 billion, which would still be slightly above last year’s sum of $36.06 billion.
The analysts highlighted several factors impeding Mexico’s economic growth over the next six months: 48% thought governance would hinder growth, 21% mentioned internal economic conditions and 18% said external conditions.
They also emphasized public insecurity (17%), internal political uncertainty (15%), problems related to the lack of rule of law (11%) and the internal economic situation (9%).
Earlier forecast reductions
In October, the International Monetary Fund (IMF) lowered its 2024 economic growth forecast for Mexico to 1.5% while projecting even slower growth in 2025, citing capacity limitations and a restrictive monetary policy.
The World Bank also reduced its economic growth forecasts for Mexico for this year and the next two, citing uncertainty for investors among the reasons for its more pessimistic outlook.
With reports from El Financiero, Alto Nivel and Forbes
The last part of this article includes the projects from the IMF. I think the outside and international economists are likely to be more accurate. What happens in Mexico if Trump were successful in expelling Mexicans who are presently sending their families $68 billion dollares USA each year.
Yea, heaven forbid that the Mexican government might have to take responsibility for providing good paying jobs for their repatriated citizens…
What happens? Well, the price of a kg of avocados in Mexico will drop from 50 to 25 pesos in with all the extra labor. The price of an avocado in the US will go from $3 to $4 with the tariff pushing it upward and the reduced price in Mexico pushing it downward. And an avocado salad in a US restaurant will go from $14 to $36 based on higher ingredient costs and the sharp increase in the labor rate it’s going to take to fill all those back of house and server positions with gringos who really don’t want those jobs anyway.
The start of 2025 is going to be a disaster for economic growth because of the new 25 % tariffs that are going to be implemented by Trump. A GDP growth rate of 1.25% in 2025 is the worst news to start the new year. New foreign investments in Mexico are going to hesitate and may even disappear because of the new 25% tariffs. President Sheinbaum and Economic Minister Marcelo Ebrard are facing a Hugh challenge with all the “economic uncertainty” ahead plus the deportation of the 1.1 million deported undocumented workers headed back to Mexico looking for work. A very sad and balked year lies ahead for the Mexican people.
There will be no tariff on Mexico. Trump is full of threats then backs off. Remember when Mexico was going to pay for his wall? Never happened.
This all appears to me to be more of the “sky is falling” prophecies by the past ruling oligarchy, the elites of Mexico. This is just a continuation since AMLO was elected.