Mexico’s budgetary pressures will keep growing
Tuesday, May 21, 2024
Significance
The budget deficit is increasing markedly and will probably top 6% of GDP in 2024 -- the highest level since the late 1980s -- while economic growth remains in the 2-3% range.
Impacts
- High real interest rates and continued inflows of dollars through remittances and foreign portfolio investments will keep the peso strong.
- Fiscal expansion will increase the external deficits but the current account imbalance will remain moderate, at about 1% of GDP this year.
- The four-month interregnum after the election will offer the new government time to devise its fiscal plans for 2025.