The Secretariat of Finance and Public Credit attributed the 0.6% decline in Gross Domestic Product (GDP) in the third quarter of 2024 mainly to the drought, which severely affected the agricultural sector, causing its worst performance in 25 years. This contraction in the economy represented the first drop in three years.
"We are facing a significant hydric effect that explains half of the impact we had in the last quarter. That’s why we don’t believe these results will divert our fiscal goals," mentioned a representative of the agency. It was also highlighted that the government is prepared for possible adverse scenarios, such as stricter measures from the United States.
As for the actions taken, it was reported that resources from the FEIP, a fund to address unforeseen events impacting the economy, are being increased. With around 45 billion pesos, the aim is to counteract the negative effects and ensure economic stability.
Despite the uncertainty in the financial markets, the Secretariat of Finance stated that this situation will be temporary and dismissed the possibility of a recession in Mexico. With growth projections between 2 and 3% for this year, the agency is confident in exceeding market expectations, which are around 1.5%.
Edgar Amador, Deputy Secretary of Finance, mentioned that uncertainty will decrease once the trade rules of the USMCA and the secondary laws related to constitutional changes in the country are defined. Despite the current economic challenges, it is expected that weather conditions will improve and promote a return to growth.
In summary, although risk factors such as trade uncertainty and local reforms persist, the government remains optimistic about the economic projections for this year. There is a focus on reducing the fiscal deficit and exceeding growth estimates, trusting that the economy will recover once external and internal conditions improve.
