Economic Deceleration Following a Change in Government Poses a Significant Challenge in Mexico
The year 2024 presents substantial challenges for Mexico's economy, with one of the key issues being economic deceleration tied to geopolitical concerns, international events, and unavoidable national occurrences such as the United States elections and various political shifts within the country. Economic deceleration refers to a period during which a country's or a geographic region's economic growth becomes slower compared to previous periods. Despite this, the International Monetary Fund's forecast positions Mexico with a 4% growth rate, which is a favorable figure, contingent upon necessary measures being taken to safeguard the economic equilibrium from both national and international events.
Another aspect to consider is the global economic deceleration amidst conflicts such as those in Ukraine and Gaza, coupled with the impact of climate change on various nations. It's essential to remember that the world economy continues to be weakened by wars, leading to significant disruptions in trade and crises related to food and fuel prices, thus contributing to inflation increases and the tightening of global financial conditions.
Inflation in Mexico has continued to rise, albeit at a slower pace since 2018. However, it is projected to reach a 3.5% growth rate in 2024. The rise in prices of imported products hinders the implementation of anti-inflationary measures. Despite significant increases in the minimum wage and a substantial rise in the Elderly Pension, Mexicans are likely to experience an increase in the cost of the basic basket of goods.
As of November of the previous year, fiscal balances showed an orderly evolution that helped maintain public debt at a sustainable level, remaining below 50% of the Gross Domestic Product. Recognizing Mexico's robust macroeconomic fundamentals and its ability to confront adverse scenarios, the International Monetary Fund renewed Mexico's Flexible Credit Line for an additional two years on November 15, 2023.
All indications point to a year of significant economic activity, but one fraught with challenges, particularly in dealing with both external and internal events. It would be prudent to consider making secure savings and investments that maintain financial stability in case of any unforeseen circumstances, especially in the middle of 2024.
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