The International Monetary Fund (IMF) publishes its world economic outlook (WEO) in April each year. This document contains the forecasts of this institution for the main economic variables of the different countries and an analysis of the recent evolution and future prospects for the world economy. According to the IMF, how does the expected economic performance for Mexico compare with that of other economies? How do we compare with Denmark?
In general terms, the International Monetary Fund expects a relatively poor performance of the global economy. It estimates that the world economy will have grown 3.2% in 2023 and will maintain the same growth rate in 2024 and 2025. This is lower than the recent historical average.
As for inflation, it is expected to decrease gradually from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025. This leads to the assumption that central banks in several countries will reduce their reference interest rate in this year which could help boost economic growth. However, the IMF expects that several countries will begin to raise taxes and reduce public spending to correct the fiscal imbalances that have recently been incurred. This may be the new challenge facing the world economy in the coming years.
In the particular case of Mexico, the IMF projects growth of 2.4% in 2024 and 1.4% in 2025. In this way, Mexico will grow in 2024 less than the world average (3.2%) and much less than the average of emerging economies. and in development, which is the group to which it belongs (4.2%).
In this sense, it is important to consider that more developed countries tend to grow more slowly. These countries are already at the limit of global productivity and producing more means pushing those limits a little further with innovation and technology. For their part, emerging and developing countries must grow at higher rates to “catch up” with the more economically advanced countries.
Thus, the group of developed countries is expected to grow on average 1.7% in 2024. The United States is clearly a special case, since it could grow 2.7% this year. The economic dynamism of our northern neighbor is surprising. Mexico may not yet have Denmark’s health system, but it is approaching its low growth rate (2.1%), when it should have a growth closer to that of emerging and developing countries that, as mentioned, are It is expected to be double what was predicted for our country.
Regarding inflation, the world economic outlook document projects that Mexico will close 2024 with inflation of 3.5% and 3.0% by 2025. The IMF forecasts inflation for 36 countries in Latin America and the Caribbean and, in this group, Mexico occupies 16th place if these countries are ordered from highest to lowest expected inflation in 2024. By the way, the expected inflation for Denmark in 2024 and 2025 is only 1.9%.
Perhaps the most relevant indicator for well-being is the growth of the Gross Domestic Product (GDP) per capita because it gives us an idea of whether we have more goods and services available considering population growth. In this sense, of the 32 countries in Latin America and the Caribbean, which have this data in the IMF database, Mexico would occupy 24th place if we consider the growth of its GDP per capita over the last six years. From 2018 to 2024, Mexico’s GDP per capita would have grown only 0.8%. The comparable figure for Denmark is 9.8% (more than 12 times the per capita growth of Mexico).
The global economic outlook document shows a picture of relatively low growth in 2024, but declining inflation for the global economy. Mexico does resemble Denmark in terms of expected growth for 2024 when it should be more similar to other emerging countries. It is not so similar in other ways such as its recent high per capita growth or its low inflation rate.
