The economy in Mexico is losing momentum and entering a period of uncertainty

The economy in Mexico is losing momentum and entering a period of uncertainty. The economic outlook in Mexico has experienced a drastic shift in recent months, moving away from the positive expectations of last year to a scenario marked by deceleration and uncertainty. The most recent data reflects a concerning situation, with a decline in economic growth that has forced various experts to revise their forecasts downward for this year. Neither the increase in government spending nor the boost from election campaigns have been sufficient to maintain the momentum of the Mexican economy. The International Monetary Fund (IMF) has reduced its growth forecast for Mexico for the second time this year, now at a modest 2.2% for the year's end. This downward revision adds to those of analysis firms and investment funds, which have also adjusted their expectations, increasingly distancing them from the government's target of 2.5%. Manufacturing production has decreased, as well as consumption, while the creation of formal jobs has stagnated, causing concern in various sectors of the Mexican economy. Janneth Quiroz, the Director of Analysis at Monex, points out that growth expectations for this year were frustrated despite the increase in government spending and the boost from election campaigns. The Mexican economy grew by 1.9% in the first quarter of the year, marking the sixth consecutive quarterly deceleration and raising uncertainty about the expected economic recovery following the crisis caused by the pandemic. Formal employment in Mexico has also shown signs of deceleration, with a 2% year-on-year growth in June, representing a 0.2% decline compared to the previous month. Analysts predict that this trend will continue in the coming months, reflecting a more moderate growth pace compared to previous years. Consumption has experienced a significant decline so far this year, partly attributed to the increase in prices of fruits and vegetables, leading Mexicans to reduce their purchases. Inflation in Mexico reached a peak of 4.98% in the last month, a significant increase driven by factors such as the historic drought affecting agricultural production in the country. Prices of fruits and vegetables have seen increases of up to 130%, directly impacting the population's purchasing power and raising concerns about short-term economic stability. In the second half of the year, attention is focused on the external sector and the trade relationship with the United States, Mexico's main trading partner. The economic slowdown in the U.S. has affected the demand for Mexican goods, reflected in the 1.5% decline in manufacturing production recorded in April. Despite expectations for companies to relocate to Mexico due to trade tensions between the U.S. and China, investors remain cautious, awaiting results that will define the future of the Mexican economy. In this context of uncertainty, elections in Mexico and the United States add an additional element of concern, casting doubt on the bilateral relationship and its impact on the economy. The anti-Mexico rhetoric of the leading candidate in the U.S., Donald Trump, has contributed to increasing uncertainty and complicating decision-making for investors and business owners in both countries. In the midst of this challenging landscape, Mexican authorities face the challenge of implementing measures that boost economic recovery and instill confidence in the markets to overcome this period of uncertainty and deceleration.