Mexico City. The Mexican economy has ‘bottlenecks’ in the energy and infrastructure sectors that prevent it from increasing its growth through investment opportunities. nearshoringdeclared Rodrigo Valdés, director of the Western Hemisphere Department of the International Monetary Fund (IMF).
“We see bottlenecks in some areas, and energy is one of them, infrastructure in more general terms, is something that is a limitation today in Mexico to take more advantage of the opportunities it has with the nearshoring and with other possibilities,” he said at the Regional Economic Outlook for the Western Hemisphere press conference, on the penultimate day of the annual meeting between the IMF and the World Bank held in Washington.
“The government is working on this and we fully support it, these are limitations that have to be alleviated,” he added.
He nearshoring It is a term that refers to the relocation of companies in territories where they can bring their production closer to the final consumer.
The director explained that the IMF currently carries out the annual review of Mexico as part of the process established by article 4 of the organization’s founding agreement, with which it evaluates the economic situation and prospects of each of the member countries.
The IMF forecast for the growth of the Mexican economy in 2024 is 1.5 percent and 1.3 percent for 2025.
Rodrigo Valdés mentioned that it is very important that steps are taken towards fiscal consolidation in Mexico; And regarding the impact that violence and crime generate in the country, he commented that according to the IMF, if economies in general could reduce homicides by half, they would increase their economic growth by half a percentage point in a period of 10 years.
“That is approximately something that is aligned with other estimates that are out there, in matters at a macroeconomic level, this is very important (…) It is a long way from saying to fact, there are many things to do,” he expressed.
Low productivity and investment in Latin America
Regarding Latin America and the Caribbean, Valdés stated that low productivity and investment are unresolved problems.
He noted that it is worrying that the ongoing reform agenda is notably weak and could lead to a vicious cycle of low growth, social unrest and populist policies.
“To avoid this, it is necessary to continue with the reforms. Improve governance, reinforcing the rule of law, improving government effectiveness and combating crime,” he highlighted.
To maintain a dynamic workforce and increase productivity, it is necessary to address informality and make formal labor markets more flexible, including to adapt to new technologies, he added.
He commented that increasing female labor participation can help boost the workforce and offset demographic changes.
He highlighted that to boost investment it is necessary to improve the business environment, promote competition and increase international trade.
In its Western Hemisphere Regional Outlook report, released today, the IMF stated that fiscal consolidation must advance without delay to protect priority public investment and social spending, which in turn would support the normalization of monetary policy.
Most central banks are well positioned to proceed with monetary easing, striking a balance to offset the risk of renewed price pressures and an economic contraction.
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