The Ministry of Finance does not foresee a recession

Deputy Finance Minister Edgar Amador affirms that Mexico's GDP will grow by more than 1.3%, a figure predicted by the IMF and the World Bank.

October 30, 2024

Officials from the Ministry of Finance and Public Credit said that Mexico's economy will grow by more than 1.3 percent, a figure predicted by analysts and described by the same agency as "pessimistic".

They also mentioned that they have no indicators that would allow them to predict an economic contraction in the short and medium term. The undersecretary emphasized that Mexico's economic growth data is "quite solid and quite good" after the national GDP had faced continuous external shocks.

Mexico's economy grew 1.5% annually in the third quarter of 2024, a better figure than expected, according to the estimate published by the National Institute of Statistics and Geography (INEGI) this Wednesday, October 30.

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The Treasury explains which factors "shield" the national economy

The most representative safeguard is the flexible exchange rate, which accommodates supply and demand, so that the real economy can absorb them.

The undersecretary highlights that after the COVID-19 pandemic, the floating exchange rate served to insulate the real economy from these shocks, as well as from the US financial crisis in previous years.

The support for this regime lies in international reserves which are at record historical levels, in addition to having healthy and sustainable public finance indicators and having public debt at stable and sustainable levels, with a moderate debt-to-GDP ratio, compared to countries similar to ours.

Another factor that helps with financial protection is the rebalancing of external debt with internal debt and the oil hedge, which is also used to cover part of the income.

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What is Mexico's growth outlook in 2025?

The International Monetary Fund (IMF) forecasts that Mexico's economic growth will slow to 1.3 percent next year, due to weakening domestic demand.

The World Bank is more optimistic, estimating that GDP will rise by 1.5 percent and acknowledging that Mexico has a stable macroeconomic framework and a large manufacturing base.

On the negative side is the Bank of Mexico (Banxico), which last August cut its growth forecast from 1.5 to 1.2 percent as national economic activity goes through a period of weakness and uncertainty.