The International Monetary Fund (IMF) published its report on the world economy this week, including growth forecasts. The world is recovering from several major disruptive shocks such as the pandemic, the Russia-Ukraine War, and extreme weather events. These episodes damaged global supply chains resulting in inflationary pressures that persisted for an extended period of time.
In general, global inflation has followed a downward trend as a result of restrictive monetary policy, that is, high interest rates. Some developed economies, such as the US, continue to surprise on the upside in an environment of global economic slowdown.
The IMF estimates that global economic growth will be stable in 2025 at around 3.2 percent annually. Internally, the IMF report cuts the growth rate of emerging countries with geopolitical problems such as in the Middle East, Central Asia and Sub-Saharan Africa.
In contrast, it raises the growth prospects of Southeast Asian countries supported by the dynamism of the semiconductor and artificial intelligence sector. Likewise, the Latin American region is expected to grow at a rate of 2.5 percent out of a 2.1 percent annual growth rate this year.
For developed countries, an economic recovery led by Europe is mostly expected. In the US, an expansion of 2.2 percent is expected next year.
For Mexico, the IMF estimates economic growth of 1.3 percent in 2025 after an expansion of 1.5 this year. Existing fiscal pressures are behind this forecast. This year the fiscal deficit doubled, which is generating pressure on public finances.
We should add the possible adverse impacts on the national external sector of an implementation of US tariffs as proposed by Donald Trump. In contrast, most Latin American countries will see an expansion in their growth rate. Fourteen Latin American countries are expected to grow more than Mexico.
Thus, 2025 will be a year of low growth for Mexico, contrasting with the US and the rest of the Latin American region. Even with nearshoring, we will see very poor economic growth rates. The existing fiscal problems should include low investment in energy generation (electricity), water and the lack of qualified human capital. If we add uncertainty over judicial reform and a more protectionist US trade stance, we could see even lower economic growth rates.
The author is general director of GAMMA Financial Solutions and professor of Economics and Finance at EGADE Business School. He has a PhD in Finance and a master’s degree in Financial Economics, both from the University of Essex in the United Kingdom.
