THE CENTER FOR PRIVATE SECTOR ECONOMIC STUDIES (CEESP) highlighted in its weekly analysis a worrying trend in the Mexican economy: the slowdown in investment and consumption.
The completion of major government projects, such as the Mayan Train and the Dos Bocas Refinery, coupled with growing political uncertainty, have led to a slowdown in economic dynamism.
Gross fixed investment, a key indicator for measuring the country’s productive dynamism, fell 1.0% in June compared to the previous month.
Although it grew by a scant 0.7% in annual terms, this is its lowest growth since March 2021. This stagnation is particularly worrying given the context of opportunities presented by nearshoring.
Mexico may be missing out on an opportunity to attract foreign investment in a global environment that favors the transfer of operations to countries closer to the consumer centers of North America.
The recent approval of the reform of the Judiciary also adds a component of uncertainty.
While structural reforms are necessary, the perception of instability can hinder investment decisions, negatively affecting key sectors of the economy.
As for public finances, the government says its balance sheets are in line with fiscal targets and that debt is sustainable.
However, CEESP warns that these projections are based on optimistic estimates.
Between January and July, public sector revenues grew by a modest 3.3%, while spending increased by a considerable 10.8%, suggesting that controlling public spending will be a key challenge in the coming months.
Another worrying factor is the slowdown in private consumption, which grew by just 2.5% in June, its lowest rate in three months.
This indicates that domestic demand, a crucial driver of economic growth, is losing steam.
Expectations for Gross Domestic Product (GDP) are equally gloomy, with a growth projection of 1.56% for 2024, a low figure compared to previous years.
PASSENGER TRAFFIC In August, international traffic at the airports operated by Grupo Aeroportuario del Centro Norte (OMA) registered its third consecutive decline, with a drop of 6.6%. This drop, the most pronounced since February 2021, has been driven mainly by the decrease in domestic traffic, which fell by 8.7%, affected by factors such as the slow recovery of tourism in Acapulco after Hurricane Otis. Despite this, international traffic at the terminals of the group led by Ricardo Dueñas has shown a growth of 11.1%, highlighting the opening of new routes such as that from Monterrey to Seoul, by AeroMéxico.
THE AUTOMOTIVE SECTOR The Mexican economy continues to show sustained growth, with an 8.3% increase in light vehicle production in August, according to Inegi. This advance consolidates five consecutive months of growth, standing out as the second best August in eight years. Exports, for their part, also reported an increase of 1.7%, recovering after the decline in July. These data reflect the resilience of the industry, which has maintained a good performance so far this year, with an accumulated growth of 5.3% in production and 7.4% in exports, indicating a positive trend.
THE PROPOSAL Limiting imports of genetically modified corn into Mexico could trigger a second dispute panel under the USMCA, according to Kenneth Smith, a former negotiator of the treaty. This reform, which restricts purchases to cracked corn, would generate greater tensions with the United States, which already faces a panel on this issue. Smith warns that this measure would be more in violation of the trade agreement, which could lead to sanctions. With a verdict pending in the first panel, trade tensions are likely to escalate if this restrictive policy continues.
PACIFIC AIRPORT GROUP (GAP) managed to raise 5,648 million pesos through the issuance of a five-year bond on the Mexican Stock Exchange, with a demand 1.2 times greater than the original amount. This bond, maturing in 2029, will pay interest at a variable rate and the funds will be used to pay off a previous bond and to invest in Mexico.
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