Introduction
For Mexico’s Gross Domestic Product (GDP) per capita to start recovering from the significant drop during Andrés Manuel López Obrador’s six-year term, the country’s economy should sustain annual growth rates of 4.5%.
Current Economic Situation
Currently, there’s little to celebrate as the modest growth projections for 2025 stand at only 1.0%. The previous six-year term was one of the weakest economically, with the national production increase per person falling by -1.05%. This marked the first six-year period with a per capita PIB contraction since the 1980s under López Obrador’s administration.
International Perspectives
Both the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) have revised their growth projections, reflecting the lack of domestic drivers and global uncertainty.
- IMF: Initially estimated a 0.2% growth in July amidst uncertainty over Trump’s tariffs on Mexican exports. Now, with paused tariffs and T-MEC trade agreement clarity, the IMF projects 1.0% growth for 2025.
- OECD: Revised their June estimate of 0.4% to 0.8% in their latest update, aligning with improved global expectations and most of its member countries.
Recommendations from IMF and OECD
The IMF advises Mexico on several fronts:
- Fiscal consolidation: Aim for more ambitious fiscal measures to have room for addressing potential economic imbalances.
- Private sector collaboration: Seek partnerships with the private sector in the energy industry.
- Investment climate: Enhance the investment climate and remain cautious about global trade topics.
- Interest rates: Exercise caution with interest rates and wait for inflation to clearly approach the central bank’s 3.0% target.
Similarly, the OECD warns of increased price pressures and adjusts its general price index estimate from 3.2% to 3.6%.
Conclusion
Once the economy shows signs of sustained GDP per capita recovery with inflation within the central bank’s target, there will be reason to celebrate. Until then, market attention remains on the presidential narrative that has maintained alternative data dominance for seven consecutive years.
