Moody's forecasts 2.2% growth for Mexico in 2024.

The credit rating agency Moody's Investors Service has maintained its growth estimate for the Mexican economy at 2.2% for the year 2024, highlighting factors such as strong domestic demand and the impact of the phenomenon of companies relocating, known as 'nearshoring'. In its most recent report, Moody's noted that the growth of the G-20 economies will stabilize at slightly lower levels this year, but emphasized that Mexico will continue to show solid performance, driven by robust domestic demand and favorable conditions for 'nearshoring'. During the year 2023, the Mexican economy managed to expand by 3.2%, surpassing the average growth rate recorded between 2000 and 2019, although below the 3.9% reached in 2022. Moody's foresees a slowdown in growth for 2025, placing it at 2%, attributing this decline to several factors. The rating agency highlighted that the good performance of the Mexican economy in 2023 was mainly driven by strong domestic demand, fueled by low unemployment and solid growth in real wages for formal workers. Furthermore, Moody's emphasized the influence of U.S. policy incentives and the relocation of supply chains in North America, especially in sectors such as semiconductor and battery manufacturing, which have stimulated the 'nearshoring' trend and have boosted investment in Mexico. However, the rating agency also warned about structural deficiencies related to infrastructure, obstacles in public policies, and water scarcity in industrial centers near the United States, which could hinder the full realization of the benefits of 'nearshoring'. Regarding inflation, Moody's projects it to close the year 2024 at 4.2%, above the 3% target set by the Bank of Mexico (Banxico). Factors such as economic growth, increases in real wages, and spending related to the general elections are expected to keep inflationary pressures in the country. Finally, Moody's considered it unlikely that significant policy changes will occur if the current mayor of Mexico City, Claudia Sheinbaum, the favorite for the upcoming presidential elections in June, emerges victorious. However, the agency pointed out that the maneuverability of the next administration will depend on the composition of Congress and could be limited by a weakening fiscal position of the country. In summary, Moody's maintains a positive outlook on the Mexican economy for 2024, but warns of possible obstacles that could affect its performance in the near future.