The deceleration that usually occurs during the first year of a new administration in Mexico will not occur in 2025, Barclays expects.
The economy of Mexico will continue to slow down this year, but not as much as the growth expected by the consensus of around 1 percent.
We project a growth rate of 1.4 percent, since we take into account the negative (limited) effects of the tax consolidation of two percentage points
described Gabriel Casillas, chief economist for Latin America in Barclays.
He explained that the risks for Barclays growth forecast is inclined to rise, due to two factors: better manufacturing industry prospects this year, since the economic team expects industrial production to grow 0.5 percent in 2025, Faced with the contraction of 0.3 percent of last year, and its belief that the deep deceleration that usually occurs during the first year of a new Mexican administration will not occur in 2025.
Yes, the economy will slow down, but it will not stop, said the specialist. Economic growth seems to have softened in much of the region in the late 2024. Despite the slowdown, we hope that the activity will behave reasonably well in 2025
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Next Friday, the National Institute of Statistics and Geography will publish the revised figure of the Gross Domestic Product (GDP) for the fourth quarter of 2024. This second publication offers a more detailed image of the growth composition.
In Mexico, 2024 ended with a weaker tone than expected. The GDP recorded a quarterly contraction of 0.6 percent in the fourth quarter, due to a greater decrease in agricultural production (a fall of 8.9 percent quarterly) and a slowdown in the services sector (an advance of 0.2 percent quarterly); While industrial activity contracted 1.2 percent during quarter.
According to INEGI, GDP grew only 1.5 percent in 2024 for the whole year, more slowly than 1.6 percent of consensus. It is an important slowdown with respect to 3.3 percent of 2023.
They caused the slowdown in 2024 deep effects of El Niño on agricultural production; The uncertainty derived from the presidential elections in Mexico and the United States, which was reflected in the atony of the world manufacturing sector, the slowdown in crude oil production, the slowdown in construction investment, which resulted in a weak annual growth of 0.3 percent of industrial production, a series of other specific events, such as intermittent road locks and trade problems due to the failure of the customs authority system, which reduced economic activity and increased the volatility of GDP figures, as well as the effect of public spending on economic activity.
Although there was a considerable increase in public spending, its effects on the real economy were actually observed a year earlier
Barclays said.