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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

March 12, 2024

What Factors Are Driving Mexico’s Economic Growth?

Mexico’s central bank, pictured above, lowered its forecast for this year’s economic growth to 2.8 percent. // File Photo: Mexican Government.

Q

  • Mexico’s inflation rate declined to 4.45 percent in the first half of February, nearly a half percentage point lower as compared to January, Mexico’s National Institute for Statistics and Geography said Feb. 22. The country’s central bank kept its benchmark interest rate steady at 11.25 percent in February for the seventh straight meeting. Additionally, the central bank on Feb. 28 lowered its economic growth forecast for this year to 2.8 percent from its earlier estimate of 3 percent. How well is the Mexican economy performing overall? Which industries in Mexico are doing the best, and which are struggling? What implications do Mexico’s current economic indicators have on the country’s politics and the upcoming elections?

A

Lucinda Vargas, associate director of the Center for Border Economic Development at New Mexico State University: “Mexico’s economic performance in the post-pandemic period has been substantially boosted by the nearshoring trend that is catapulting its manufacturing and export sectors. While in 2024 the impetus of this trend will continue to favorably affect the Mexican economy, other indicators point to a slowdown. For example, labor productivity growth was just 0.4 percent in the last quarter of 2023. GDP per worker in the 20 years leading up to the pandemic averaged barely positive growth of 0.1 percent per year. To boost productivity growth, which is what ultimately translates into overall GDP growth, Mexico needs…”

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