As 2024 unfolds, Mexico confronts fiscal challenges reminiscent of the difficulties last seen in the 1980s.
The local economy’s cooling has alarmed the Mexican Institute of Finance Executives (IMEF), which shared insights on economic trends.
José Domingo Figueroa explained that the preliminary 2025 budget, unveiled in March, indicated increased spending and revenues.
Fiscal pressures intensify with major federal projects slated to finish in President López Obrador’s final year.
These projects are expected to demand greater operational and maintenance expenditures in the future.
At a press conference, Figueroa expressed worries that financial pressures might lower credit ratings, increasing costs and limiting credit access.
Federico Rubli observed that reduced economic forecasts suggest an expected slowdown during government transitions.
This slowdown is particularly poignant as Mexico continues to shoulder the hefty debt of Petróleos Mexicanos (Pemex), further strained by declining oil prices.
Rubli emphasized, “The economy is cooling down. It’s not heading into a recession, but the slowdown is evident.”
Mexico Grapples with Significant Fiscal Challenges Unseen Since the 1980s
In response to these challenges, IMEF has adjusted its growth forecast for Mexico’s economy in 2024 to 2.3% from a previous estimate of 2.4%.
Looking ahead to 2025, growth expectations have been revised downward to 1.8% from 1.9%.
Despite these adjustments, Mexico’s economy grew by 3.2% in 2023, reflecting its resilience as the second-largest economy in Latin America, after Brazil.
The Mexican government remains cautiously optimistic, projecting GDP growth of between 2.5% and 3.5% in 2024 and between 2.0% and 3.0% in 2025.
These projections underscore the challenges and the enduring strength of an economy navigating through turbulent fiscal waters.