MEXICO CITY (Reuters) – The International Monetary Fund (IMF) estimates that Mexico’s economic growth will slow to around 1.5% this year before dipping to just 1.3% in 2025, according to the international lender’s updated forecasts released on Friday.
The IMF noted that sustainable and inclusive growth in Latin America’s No. 2 economy will require a “broad set of reforms.”
Economic expansion in Mexico was moderating because of both “capacity constraints and restrictive monetary policy,” it said in a statement.
The updated forecasts follows the approval of the current two-year flexible credit line arrangement the IMF has with Mexico, equivalent to about $35 billion.
Despite higher government spending, the IMF pointed out that private sector consumption and investment is decelerating, as is employment growth.
“(Economic) growth is expected to moderate further in 2025, reflecting a withdrawal of fiscal stimulus and a slowdown in the U.S.,” according to the statement.
“Inflation pressures are receding, and continued monetary restraint and slowing activity are expected to lower inflation to Banxico’s 3-percent target by 2025,” it added.
The IMF also sees Mexico’s government budget deficit increasing substantially this year, and gross public sector debt rising to 58% of GDP by the end of the year.