Mexico's economy registered slight growth in the first quarter of 2024 compared to the previous three months. Gross Domestic Product (GDP) grew 0.2% from January to March, driven by the services sector, which includes trade and tourism. The services sector recorded growth of 0.7% compared to the previous quarter, while the primary sector fell 1.1% and industrial activity decreased by 0.4%. Compared to the same period last year, seasonally adjusted figures show that the country's GDP rose 2%, the lowest annual rate in the last nine quarters. The director of Banco Base, Gabriela Siller, said that despite being above expectations, Mexico's GDP growth in the first quarter was low for an election year and there is a risk of falling into stagflation. The Ministry of Finance expects the Mexican economy to grow between 2.5% and 3.5% this year, driven by greater consumption, infrastructure works, and growing external demand from the United States. In 2023, Mexico's economic growth exceeded market analysts' projections for the third consecutive year. [d120bbb9]
Mexico's economy is projected to continue growing steadily after the June presidential election, in line with the performance of the United States. The fiscal front will become more challenging for the new government, with concerns about the impact on inflation. Leading the electoral race is ruling party candidate Claudia Sheinbaum, who has promised fiscal discipline but has yet to offer detailed plans. Gross domestic product (GDP) is forecasted to rise 2.2% this year and 1.9% in 2025, driven by good macro results in the U.S. and increased remittance flows. Mexico's overall fiscal deficit is set to end 2024 at 5.9% of GDP, the highest in IMF public finances data series starting in 2015. The deficit is expected to be reduced to 3.0% in 2025 if goals set by the current economic team are met. The Mexican benchmark rate is expected to be cut by 50 basis points each quarter this year, ending 2024 at 9.50% and 2025 at 7.50%. Some members of the central bank have called for a cautious policy due to fiscal doubts, elevated inflation, and the U.S. Federal Reserve's switch to a more vigilant stance on the start of an easing cycle. [ba8eb88f]