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WorldMexico's economy: 3 reasons why it will have 'surprising' growth in 2024

Mexico’s economy: 3 reasons why it will have ‘surprising’ growth in 2024

Those who bet against Mexico’s economy don’t learn, right? During the last quarters, the dynamism of activity in our country has meant that international institutions and banks have had to update the economic forecast for Mexico whenever they can.

“Fortunately we have grown more than their predictions”was President Andrés Manuel López Obrador’s criticism of this situation, pointing out that during his government he has always bet against Mexico’s economy.

And 2024, his last year as president, ‘looks’ like he is right once again. How do economists see GDP for this year and what can boost its growth?

Mexico’s economy: How much will it grow in 2024?

That depends on who you ask, and even within the Government itself they do not agree on the forecast. There is the official one, the one from the Ministry of Finance and Public Credit. In their Economic Policy Criteria For this year, the agency expects GDP to increase 3 percent, the same forecast it gave for 2023.

“In 2024, it is expected that the growth of the Mexican economy will be based on the strength of private consumption; higher levels of public and private investment, which will allow an increase domestic market connectivity and export routes; guarantee energy availability; enhance the economic benefits of tourism and increase the country’s productive capacity,” he explained in the document.

It is also the most optimistic forecast of President López Obrador, who ‘striked’ with his forecast for the growth of the economy in what will be the end of his six-year term.

“My forecast is that we will increase this year 3.5 percent. I earned like two or three meals because the economists, the technicians, still under the influence of the neoliberal model, are very pessimistic,” she revealed in her ‘morning’ on January 12.

The Bank of Mexico gave a forecast that is not so optimistic, but not so pessimistic: For the Central Bank, the economy will advance 3.3 percent this year thanks to “the resilience of external demand and the dynamism of domestic spending.”

There are also the forecasts that are more ‘reserved’ as to what may happen to Mexico’s economy in 2024, an election year: The International Monetary Fund forecasts an advance of 2.1 percent, while the rating agency Fitch went lower and estimates that GDP will rise only 2.4 percent.

Why could Mexico’s economy grow more than those forecasts?

Enrique Quintana, vice president and general editorial director of The financialconsidered that the most relevant factor for greater than expected growth in Mexico will be what happens with its northern neighbor, USA.

And what do the figures say? Encouraging news. Quintana highlighted retail sales growth, which achieved its best data since January 2023; the one of the industrial production in December, which with an increase of 1 percent marked its best record in a year; and that of imports of goodswhich in November broke a downward streak of several months.

“In short, it seems that the best performance of the US compared to what was expected “It can give a boost to Mexico’s economic activity in the coming months,” he writes in his column this Monday.

Quintana also stressed that the 2024 election factor can make the economy do better than expected. Which is the reason?

“In fact, the fact that federal government spending is in deficit by 5.4 percent (using the public sector financial requirements indicator) indicates that public spending will contribute to greater demand internally this year,” he added.

And in Quintana’s opinion, nearshoring, the ‘fashionable’ trend in investments during 2023, will finish taking hold this year and one of its main beneficiaries will be Mexico. “Everything indicates that it will persist the impulse that nearshoring has created in gross fixed investment and that has achieved historical records.”

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