Mexican Economic Activity To Ease In 2024, But Remain A Regional Outperformer

• Following an initially sluggish post-pandemic recovery, Mexican real GDP growth has now averaged around 4.0% on a q-o-q annualized basis for eight consecutive quarters, which compares to a 2015-2019 run rate of closer to 1.5%.
• This economic strength has in turn reflected the combined impact of US economic resilience which has lifted both exports and supported remittance inflows, the Mexican government’s pursuit of a relatively loose fiscal policy stance, and nearshoring-related headlines that are helping to boost private sector sentiment.
• Given these factors, Fitch remains upbeat on the outlook for the Mexican economy, which it now anticipates will grow by a solid 2.5% (previously 2.0%) in 2024 after an estimated 3.5% expansion in 2023.
• This remains the base case that growth will ease throughout 2024 as the external backdrop turns gradually less favourable, weighing on exports and remittance inflows.
• These headwinds will be mostly offset by the government’s ongoing fiscal largesse over H124, but as spending is retrenched over the second half of the year growth should lose steam.

(Source: Fitch Solutions