Overview of Latin American Economies
According to a global bank analysis by Goldman Sachs, Mexico’s economy made a weak contribution to the average economic activity of the seven largest Latin American (AL7) economies during the first quarter of 2024. The AL7 countries mentioned are Argentina, Brazil, Colombia, Chile, Ecuador, Mexico, and Peru.
The real growth in the selected group of countries reached an advance of 0.8% of GDP annually between January and March of the current year, which signifies a “meager performance” compared to the 0.2% annual growth recorded in the last quarter of the previous year.
Leading Growth Factors
The analysis, led by Goldman Sachs’ chief economist for the region, Alberto Ramos, states that the largest growth in GDP within the AL7 was driven by Argentina, Brazil, and Colombia’s performance in the first quarter. Additionally, Mexico experienced a transition from negative growth to slightly positive growth.
Mexico’s Performance in Detail
In the analysis titled “Tariffs: Trick or Treat,” Goldman Sachs examined each of the seven largest economies in Latin America, including Mexico. They noted that Mexico had a “satisfactory start” to the year but questioned whether this improvement would be temporary or persistent.
“Despite greater internal and external uncertainty, Mexico narrowly avoided falling into a technical recession in the first quarter of 2024,” they commented.
Mexico experienced “modest growth” in the first quarter compared to the last quarter of 2024, assuming the timely estimate of economic activity disclosed by Mexico’s National Institute of Statistics and Geography (Inegi) at 0.2 percent.
Weak Composition in a Challenging Year
The Goldman Sachs analysis provided three observations regarding the quarterly growth record:
- Débil composición: The composition of the estimated performance was weak, relying on the dynamism of the primary sector.
- Preliminary Estimation: The observed growth rate is a preliminary estimate that needs confirmation by the end of May when Inegi releases the final GDP data.
- Weak Performance: If confirmed, a 0.2% growth rate would represent a “weak performance.”
If the 0.2% growth is confirmed with the final PIB data, Mexico’s economy will achieve an annual advance of 0.3%, the analysts added. This expectation includes an upward revision from their recent negative forecast of 0.5%.
The economists emphasized that 2025 has become a “challenging year” for Mexico due to the U.S. tariff changes, which have weakened investor and consumer confidence. They also noted that remittances will continue to exhibit volatile performance, though it may end positively but moderately compared to previous years.
