IMF’s Pessimistic Outlook for Mexico Contrasts with Hacienda’s Optimistic Projection
The International Monetary Fund (IMF) has projected a 0.3% contraction for Mexico’s GDP in 2025, which has raised concerns at the Mexican government. This forecast starkly contrasts with the Secretariat of Finance’s recent projection of a 2-3% growth rate. Claudia Sheinbaum, head of Mexico City, defended the government’s stance by highlighting the ambitious Plan México, a sexennial plan involving nearly 300 public, private, and mixed projects worth approximately $275 billion.
Sheinbaum’s Response and the Citi Survey
Sheinbaum pointed out that the IMF’s forecast does not consider Plan México. Meanwhile, a Citi survey of 36 economists predicted a 2025 growth range for Mexico from -0.7% to 0.8%. This places the lowest forecast twice as pessimistic and the highest three times less optimistic than Hacienda’s projection. Although the average of these 36 forecasts remains positive at 0.2%, it has been steadily decreasing for five consecutive months.
Comparing Mexico’s Prospects with Other Nations
The IMF’s forecast for Mexico becomes more challenging to accept when compared with other countries. For instance, the projected growth for the North American counterparts—the United States at 1.8% and Canada at 1.4%—contrasts sharply with Mexico’s negative outlook.
When looking at larger Latin American economies, Brazil is expected to grow by 2.0%, while Argentina projects a robust 5.5% growth. Among the BRICS nations, all are projected to be in positive territory: Russia at 1.5%, India at 6.2%, China at 4.0%, and South Africa at 1.0%.
Mexico’s Economic Performance: Successes and Shortcomings
Mexico’s economic situation presents a mixed bag. While it excels in maintaining stable inflation and exchange rates, its growth has been disappointing. The temptation to attribute Mexico’s 2025 numbers solely to Donald Trump’s policies and their consequences is strong, but the low-growth trend predates his presidency.
Long-term analysis reveals that several unresolved issues have hampered Mexico’s growth: institutional weakness and corruption, low productivity, limited female workforce participation, underdeveloped domestic markets, and insufficient critical infrastructure. The past few years have introduced new dynamics, including the cancellation of the Texcoco airport project and policy changes that have discouraged private investment in key sectors like energy and infrastructure.
Plan México’s Impact on IMF Forecast
Sheinbaum has urged the IMF to consider Plan México’s impact. The plan aims for sustained investment levels at 25% of GDP and the creation of 1.5 million jobs in specialized manufacturing and strategic sectors. However, achieving these goals amidst a neo-protectionist international environment and an uncertain judicial reform seems challenging.
Key Questions and Answers
- What is the IMF’s GDP forecast for Mexico in 2025? The IMF projects a 0.3% contraction for Mexico’s GDP in 2025.
- How does this forecast compare to the Secretariat of Finance’s projection? The IMF’s forecast contrasts sharply with the Secretariat of Finance’s optimistic 2-3% growth projection.
- What is Plan México and why is it relevant? Plan México is a sexennial plan involving nearly 300 public, private, and mixed projects worth approximately $275 billion. Claudia Sheinbaum highlighted this plan to defend against the IMF’s pessimistic outlook.
- How do Mexico’s growth prospects compare to other countries? Mexico’s projected negative growth contrasts with the positive forecasts for the United States, Canada, Brazil, and Argentina. Among the BRICS nations, all are expected to grow.
- What factors have contributed to Mexico’s low growth? Institutional weakness, corruption, low productivity, limited female workforce participation, underdeveloped domestic markets, and insufficient critical infrastructure have all played a role in Mexico’s disappointing growth.
- What is Plan México’s impact on the IMF forecast? Sheinbaum has urged the IMF to consider Plan México’s impact, which aims for sustained investment and job creation. However, achieving these goals amidst a neo-protectionist international environment and uncertain judicial reform seems challenging.
