Banxico reduces GDP growth projection to only 1.5% for 2024.

The Bank of Mexico (Banxico) has made a significant adjustment to its economic growth projections, lowering the expectation for gross domestic product (GDP) to a modest 1.5% for the end of 2024. This revision has taken place in the context of an uncertain global economic environment and internal challenges that have impacted the country's economic activity. The reduction is unfavorably compared to the previous estimate of 2.4%, reflecting the pressures facing the Mexican economy. In its quarterly report, Banxico highlighted that the main driving forces of economic growth in the next two years will be internal spending, specifically private consumption. This trend suggests that, amid a complicated landscape, Mexican households continue to trust in their spending capacity, which could provide relief to the economy as a whole. However, moderate growth also raises questions about the sustainability of this consumption, given the inflationary context and high-interest rates. The central institution pointed out that while an expansion of private consumption is anticipated, private investment plays a less prominent role in this scenario. This could indicate a lack of confidence among entrepreneurs to make significant investments in an uncertain environment, affecting the long-term growth capacity of the Mexican economy. The absence of robust investments could limit job creation and innovation in key sectors of the economy. Banxico also emphasized that the moderation in economic growth is an expected feature in the short term, which may be reflected in a slowdown of economic activity compared to previous years. This is particularly concerning, as a growth rate of 1.5% is considered insufficient to meet the needs of a growing population and to address the structural challenges faced by the country, such as poverty and inequality. Furthermore, Banxico's projections come in a context of political and economic tension at the global level. Factors such as the war in Ukraine, trade tensions between the United States and China, and energy crises in Europe have added uncertainty to international markets. This external context may also influence the Mexican economy, affecting exports and foreign direct investment. Monetary policy has been a central theme in discussions about economic growth. High-interest rates, implemented to combat inflation, can have a negative effect on investment and consumption. While controlling inflation is crucial, it is also essential for Banxico to consider how these decisions affect short- and medium-term economic growth. The moderate growth outlook also poses challenges for the current administration and its economic policies. The need to foster a conducive environment for investment and sustainable growth is more urgent than ever. Structural reforms that facilitate investment, improve competitiveness, and strengthen the rule of law are presented as imperatives to revitalize the economy. The most vulnerable economic sectors, such as trade and services, could be the most affected by this slowdown. The dependence on private consumption implies that any contraction in consumers' purchasing power could have ripple effects throughout the economy. Job creation and wage increases become determining factors for maintaining consumption and, consequently, growth. Finally, the reduction in GDP growth expectations by Banxico represents a call to action for all actors involved in the Mexican economy. From the government to the private sector, it is crucial to implement effective strategies to address current challenges and foster more robust and sustainable growth in the coming years. The decisions made today will determine the direction of the Mexican economy in the near future, and it is essential to act promptly and decisively.