As of December 18, 2024, the economic outlook for Mexico has soured significantly, with 47% of Mexicans viewing the economy as bad, an increase from 44% in October [84b9002e]. This decline in sentiment comes as President Claudia Sheinbaum faces potential economic repercussions from former President Donald Trump's threats to impose 25% tariffs on Mexican goods, which could further strain the country's already fragile economy [84b9002e].
Recent surveys conducted by AtlasIntel indicate that 44.5% of respondents plan to reduce their purchases in the next six months, reflecting growing concerns about inflation and economic stability [84b9002e]. The GDP growth forecast has also been downgraded, with expectations of only 1.8% growth in 2024 and a further decline to 1.2% in 2025 [84b9002e]. Meanwhile, core inflation has slowed to a four-year low, providing a slight silver lining amidst the economic challenges [84b9002e].
Public sentiment towards Sheinbaum’s administration is also shifting, as her approval rating has dropped to 63.4%, down from 66.7% in October. The survey revealed that 56% of respondents prefer spending cuts over tax increases, and 63% support maintaining a spending ceiling [84b9002e]. The primary concerns for the populace remain corruption, inflation, and crime, which have become pressing issues for the government [84b9002e].
This economic downturn follows Moody's recent downgrade of Mexico's government debt outlook from stable to negative, which was attributed to concerns over fiscal management and judicial reforms [469e8944].
Historically, Mexico has faced significant economic challenges, notably during the 'Tequila Crisis' of 1994, when a 15% devaluation of the peso led to a contraction of the economy by 5.9% in 1995 and unemployment reaching 7.1% [c12e43ea]. This crisis resulted in a $40 billion bailout from the U.S. Treasury, IMF, and Canada, and led to a shift towards a free-floating currency, which has since benefited Mexico's economy [c12e43ea].
Experts suggest that current U.S. tariffs under the Trump administration could lead to a depreciation of the peso, potentially making Mexican exports cheaper [c12e43ea]. As Mexico navigates these turbulent waters, lessons from its past may provide valuable insights into managing the economic fallout from Trump's policies [c12e43ea].