international monetary fund

Mexico GDP growth won’t touch 2% this year or next: IMF

Funds cites government's policy direction, cancelation of airport

The International Monetary Fund (IMF) has cut both its 2019 and 2020 growth forecasts for Mexico to below 2%, citing the government’s policy direction and cancelation of infrastructure projects as factors.

In its World Economic Outlook report published today, the IMF lowered its forecast for this year to 1.6% from the 2.1% predicted in January. For 2020, the organization trimmed its outlook to 1.9% GDP growth from 2.2%.

Changes to economic policy and moves to overturn or weaken the education and energy reforms introduced by the previous government were cited by the IMF as contributors to a weakened capacity for growth.

IMF chief economist Gita Gopinath told a press conference that a “more restrictive monetary policy and political uncertainty related to the new government” have had an impact on investment in Mexico.

Gian Maria Milesi-Feretti, a deputy director in the IMF research department, said investors’ confidence in Mexico was also down due to last year’s contentious negotiations between Mexico, the United States and Canada to reach a new trade agreement, and uncertainty about when it will be ratified.

The decision by President López Obrador to cancel the partially-built US $13-billion Mexico City airport was also a factor, the IMF said, as were “shifts in perceptions” about the policy direction of the new administration.

The IMF forecasts for Mexico in 2019 and 2020 are consistent with the mean figures for both years in the Secretariat of Finance’s most recent outlook.

However, they are well below the 4% average growth that López Obrador has said his government will deliver during its six-year term.

The IMF also cut its growth outlook for the global economy this year to 3.3% from a 3.5% forecast in January but maintained a 3.6% prediction for 2020.

“This is a delicate moment for the global economy,” Gopinath said.

Source: El Economista (sp) 

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