Business sector confident in improving growth forecast

The Business Coordinating Council (CCE) is confident that the Mexican economy will exceed growth forecasts that point towards a slowdown.

Mexico’s economy is already very large, estimates always come out low and in the end we growdeclared Francisco Cervantes Díaz, president of the organization in consultation with The Dayafter the Organization for Economic Cooperation and Development (OECD) reduced its growth forecast for this year from 2.2 to 1.4 percent.

Every year growth prospects are low and end up being exceeded. They always tell us that we are going to grow at 1.1 and we grow above 3commented the representative of the private sector, after participating in a meeting of the rating agency Moody’s entitled Inside LatAm: Mexico 2024. Credit outlook in the face of a new administration.

Whenever ratings may be at risk, we jump into the economy and especially in recent years, with the pandemic, we have grown as a country to the 12th largest economy (in the world).he added.

This Wednesday, the OECD reduced Mexico’s gross domestic product (GDP) growth outlook for 2024 from 2.2 to 1.4 percent. For 2025, it expects it to be 1.2 percent of GDP, when in May the estimate was 2 percent. hundred. The Ministry of Finance maintains a forecast of 3 percent for this year.

For its part, Moody’s commented that there is a risk for the rating of Mexico’s public debt – currently investment grade, that is, with little risk of default – if the economic growth it achieves is moderate, between one and 2 percent. in the coming years.

The uncertainty that the issue of reforms has generated, particularly judicial reform, we see more and more comments about the possibility of a recession in the country next year and the question is: where will we go beyond 2025?said Renzo Merino, senior vice president analyst in Moody’s Sovereign Risk Group.

The risk would be that we do not see 3 percent growth, but rather that it remains at moderate levels of one and 2 percent, obviously it can affect the credit profilehe added.

The firm’s forecast for Mexico’s economic growth is around 1.5 percent in 2024, after on May 17 it ratified Mexico’s credit risk rating at Baa2, with a stable outlook.

However, for the firm, the weakness of the institutional framework and public finances persist that are compromised and could deteriorate due to the payment of the debt and the current fiscal framework, which is pressured by the continuous support for Petróleos Mexicanos (Pemex) and social programs.

Carlos Díaz de la Garza, general manager of Moody’s Local México, explained that the renewal of the Supreme Court of Justice of the Nation through popular vote, scheduled for June 1, 2025 – as part of the recently approved judicial reform –, It could politicize the judicial system, reduce its independence and discourage foreign direct investment in Mexico, especially in infrastructure projects.

The analyst highlighted that the fiscal policy of the next federal administration will be key to counteract the probable deterioration of public finances.

He anticipated that the deficit of 5.9 percent of GDP in 2024 would be reduced next year to 4.5 percent and not to the 3 to 3.5 percent levels sought by the next government.