LatinNews Daily - 4 November 2024

*The International Monetary Fund (IMF)’s executive board has approved a review under its flexible credit line (FCL) arrangement with Mexico. The US$35bn two-year FCL arrangement was initially approved by the IMF board in November 2023. Following its most recent Article IV Consultation, the IMF stated that Mexico continued to qualify for the FCL “by virtue of its very strong fundamentals and institutional policy frameworks and track record of economic performance and policy implementation”. The IMF noted that economic activity was slowing in Mexico, with private consumption and investment decelerating, and employment growth also slowing. The IMF predicts growth will slow to around 1.5% this year, down from 3.2% in 2023, and will moderate further in 2025 to 1.3%. In terms of inflation, the IMF stated that pressures were receding and continued monetary restraint and slowing activity were expected to lower inflation to the central bank (Banxico)’s 3% target by 2025. The IMF also noted that Mexico’s fiscal deficit is “expected to register a substantial increase in 2024” which is projected to increase gross public sector debt to about 58% of GDP. However, it added that the authorities “plan to initiate a fiscal consolidation in 2025 to lower the deficit to below 3% of GDP over the medium term”.