Mexico's Economy Expected to Grow 2-3% in 2025, Budget Shows Higher Debt Levels

Mexico's economy is projected to expand between 2% and 3% in 2025, according to the country's draft budget. The budget also reveals that public debt levels are expected to reach 50.2% of GDP in both 2024 and 2025. Inflation is forecasted to slow to 3.8% by the end of 2024 and further decrease to 3.3% by the end of 2025. The fiscal deficit for President Andres Manuel Lopez Obrador's last year in office is expected to be 5% of GDP. The government anticipates a primary deficit of 1.4% of GDP in 2024 and a surplus of 0.9% in 2025. Additional revenue from higher oil prices and increased tax collection is expected to offset some costs. The budget release comes ahead of national elections in June. Mexico's projected oil output is 1.85 million barrels per day in 2024 and 1.86 million barrels per day in 2025. The Mexican crude basket is predicted to be $71.3 per barrel in 2024 and $58.4 per barrel in 2025 [bdfdd785]

Mexico's economy is projected to grow between 2.5% and 3.5% in 2024, according to a draft budget from the country's finance ministry. Inflation is expected to decrease to 3.8% this year, meeting the central bank's target of 3%, plus or minus one percentage point. The draft budget also predicts that inflation will further ease to 3.3% in 2025. The peso is forecasted to trade at 17.8 pesos per dollar this year and slightly weaken to 18.0 pesos per dollar in 2025. Average crude oil production is expected to be 1.85 million barrels per day (bpd) this year and rise slightly to 1.86 million bpd in 2025. Crude exports are projected to reach 967,600 bpd this year and drop to 958,400 bpd next year. Pemex, the state-owned oil company, pumped an average of 1.55 million bpd of crude in February, its lowest level since 1979. The draft budget is used by lawmakers to plan future spending [b19520d9].

Mexico's economy is expected to start the year with an expansion of only 0.1 percent, according to a report from FX Leaders. The Timely Indicator of Economic Activity (IOAE) suggests that economic activity in Mexico could begin the year with a contraction ranging from 0.7 percent to a growth of 1.0 percent. In a year-on-year comparison, the economy would have shown a growth of 2.2 percent at the beginning of the year. This slow start indicates that the Mexican economy may grow less than the approximately 3 percent observed in 2023. However, the report highlights that Mexico experienced a growth of 3.2 percent in 2023, and a similar figure is expected in 2024. The United States' objective to reduce dependence on China has led to the practice of nearshoring to Mexico and other countries in Central or South America, which has contributed to Mexico's growth [fd1cf0bd].

Mexico's economy grew 3.3 percent in the third quarter of 2023 year on year, driven mainly by industrial and agricultural activity. The agricultural sector grew by 5.7 percent between July and September, while industrial activity expanded by 4.3 percent. The services sector, which contributed the most to the country's gross domestic product (GDP), expanded 2.7 percent in the third quarter. Mexico's GDP accumulated a year-on-year expansion of 3.4 percent in the first nine months of 2023. This growth has surpassed expectations and is attributed to surging exports to the US and strong consumer spending. The country has benefited from the strength of the US market and nearshoring, with consumer demand and a robust labor market supporting growth. President Andres Manuel Lopez Obrador is rushing to complete infrastructure projects before his term ends next year. However, high borrowing costs and reduced government spending are expected to impact future growth. Moody's has raised its growth forecasts for Mexico's economy, citing positive surprises in productive sectors and nearshoring trends. The agency now expects Mexico's GDP to grow 3.5% this year and 2.3% in 2024. Mexico's government also forecasts GDP growth of at least 3.5% this year and next. Citibanamex Financial Group forecasts economic expansion of 3.3 percent for all of 2023, and 2 percent in 2024. In line with this positive outlook, a Reuters poll predicts that Mexican stocks will continue to gain in 2024 due to faster economic growth, with a projected 11% increase by the end of the year. The spillover of manufacturing plants relocating to Mexico for proximity to the United States is expected to support Mexico's equities. However, there may be some volatility leading up to the presidential election in June. The head of equity strategy at Masari Casa de Bolsa, Adrian Ramirez, believes that stocks may experience volatility due to political developments in Mexico and the United States, as well as policy adjustments in both countries. The campaign for the presidential vote on June 2 is starting to take shape, with ruling party candidate Claudia Sheinbaum pledging to continue the legacy of President Andres Manuel Lopez Obrador. In addition to Mexico, the Brazilian stock market is also expected to see growth in 2024, with a projected 10.6% increase by the end of next year. However, foreign investors may have less incentive to buy Brazilian stocks due to high interest rates abroad. The article also mentions the recovery of the Brazilian stock market in November after a spike in U.S. Treasury yields and stable trends in debt markets [a0dfc5e5], [388f2ff9], [f3c8c558], [631c097a], [3496e81e].

El Salvador's economy is forecasted to expand between 3% and 3.5% in 2024, according to Central Bank President Douglas Rodriguez. The country's economy grew 3.5% last year, driven by tourism and construction activity [fdf66d1e].

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Agricultural futures in the US saw declines in corn, wheat, and soybean prices. This decline in prices may have various implications for farmers and the agricultural industry as a whole [f3c8c558].