Specialists predict that the Gross Domestic Product will increase by 1.0 percent over the course of this year, which could lead to further declines in investment and keep private consumption depressed. There is caution among consumers due to the uncertainty generated by the change in administration in the United States and its possible impact on the Mexican economy.
In January, the annual consumption indicator grew by 1.9 percent, surpassing the 0.6 percent of December and showing the highest figure in five months, according to data from INEGI. Janneth Quiroz from Monex noted that the contraction in consumption in December was followed by a slight recovery in January, reflecting depressed domestic demand and a continued feeling of deceleration.
Humberto Calzada from Rankia LATAM pointed out that the slight increase in consumption could be attributed to a residual boost from the December festivities. Despite this moderate increase, analysts warn that it is not enough to counteract the lower economic activity.
Mario Correa from Economía en Breve indicated that the slight recovery in January is insufficient to lift the indicator from stagnation. There are concerns about other data pointing to greater weakness in the economy, which could lead to a recession scenario in the future.
Jesús López from Banco Base detailed that factors such as the deceleration of remittances and the diminishing effect of the minimum wage increase are negatively impacting consumption. The current uncertainty could lead to greater caution from consumers, which would affect domestic consumption in the country.
Although social programs, remittances, and wage increases have contributed to domestic consumption in previous years, the current climate of uncertainty, both internally and externally, along with inflationary pressure, could lead to lower consumption in the future, despite the implemented monetary policies.
The performance of GDP will be affected by the evolution of consumption, and a good agreement on tariffs and the USMCA could boost Mexico's growth between 1 and 1.5 percent in a favorable scenario. By 2025, a lower growth than the previous year is expected, with private consumption showing a slight recovery in January, but it is expected to remain weak in the coming months.
