Mexico Will Not Reach 3 Percent Growth: IMF

According to the International Monetary Fund (IMF), the Mexican economy will not achieve the 3 percent growth forecasted by the Mexican government, as the country will not be able to reach this goal any time soon. 

The country’s GDP has not managed to recover from the impact that the COVID-19 pandemic had on economic activity. Although it is better positioned considering its fiscal position compared with other economies that went through a similar development, the country will not have the capacity to generate more dynamic growth in the next five years. 

Moreover, according to the World Economic Outlook (WEO), Mexico’s economy will reach a 2.1 percent growth this year. The predicted rate is lower than the 2.4 percent projected in July. This drop is the result of the impact of the deacceleration of the biggest economy in the world, the US, and the effect of weaker purchasing power due to rising prices.

The new forecast of the IMF, updated from its annual review, is slightly below the 2.2 percent foreseen by the Bank of Mexico. It is also below the 2.4 percent estimate of the federal government and a bit up the 2 percent average that the market is estimating, according to the most recent survey from Citibanamex. 

The experts of the IMF predicted that the Mexican economy will stave off the strong economic deceleration of the US, which this year will increase its GDP by 1.6 percent, a forecast that incorporates a drop from the 2.3 percent calculated in July. 

According to the WEO, IMF maintained its estimations for Mexico’s GDP of 1.2 percent for 2023 compared to the update in July 2022. With this forecast, IMF is the international organization with the most pessimistic view of Mexico’s economic performance, presenting a more moderate forecast than the one by the World Bank and the Organization for Economic Cooperation and Development (OECD). The latter two agree on a 1.5 percent advancement in the GDP for Mexico. 

Based on this prediction, the possibility of Mexico reaching a 3 percent expansion, which the government predicted when calculating its budget, is discarded. According to the IMF’s long-term projections, the Mexican economy will reach a 2.1 percent annual growth in 2027, like the growth it will have this year.