IIF Cuts Mexico’s 2024 GDP Growth Forecast to 1.3%

The IIF has lowered its forecast for Mexico’s economic growth, reflecting the complex global landscape. This new outlook paints a more cautious picture for the country’s economic future.

The Institute of International Finance (IIF) is the global association of the financial industry, representing over 400 members from more than 60 countries

Mexico’s economy will likely grow by 1.3% this year, down from the IIF’s earlier 2.3% prediction.

Notably, this falls below the 1.5% average estimate from financial analysts surveyed by Citibanamex.

For 2025, the IIF foresees a slight uptick to 1.5% growth during Claudia Sheinbaum’s first year in office. Meanwhile, the U.S., Mexico’s key partner, faces a “significant moderation” in economic activity.

The IIF expects U.S. GDP growth to slow from 3.7% in 2023 to 2.4% this year. They attribute this decline to the Federal Reserve’s aggressive monetary policy changes.

Globally, the IIF projects 2.9% economic growth for both this year and next. This rate suggests a return to pre-pandemic levels of worldwide economic activity.

However, geopolitical stability remains crucial for next year’s economic outlook. Ongoing conflicts and tensions pose potential risks to global economic performance.

For Latin America, the IIF anticipates significant currency appreciation. This expectation is based on the narrowing yield differential between U.S. and emerging market assets.

Lower U.S. interest rates typically encourage capital flows to higher-yielding assets in emerging markets.

However, the IIF cautions that the benefits of lower rates must be carefully weighed against inflation risks.

IIF Cuts Mexico’s 2024 GDP Growth Forecast to 1.3%

This is particularly crucial in environments where domestic price pressures remain high. The situation requires a delicate balance between stimulating growth and managing inflation.

The IIF experts, led by economist Jonathan Fortun, believe inflation will remain a concern in Mexico and Brazil.

This persistent inflationary pressure may limit the central banks’ ability to reduce interest rates.

Even with more favorable external conditions, these countries may face constraints in monetary policy adjustments.

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