Mexico (Washington Insider Magazine)— The Mexican Institute of Finance Executives (IMEF) released the result of its manufacturing and non-manufacturing indicators and the result for May reflects that the Mexican economy maintains low dynamism. Both indicators recorded figures that indicate a stagnation in the pace of expansion. These indicators raise concerns about the country’s economic prospects for the rest of 2024 and beyond.
IMEF Indicators Highlight Slowdown
The IMEF recently released its manufacturing and non-manufacturing indicators for May, revealing that the Mexican economy is experiencing low dynamism. Both indicators suggest a stagnation in the pace of economic expansion. The IMEF analysis highlighted that the slowdown observed in the early months of 2024 could negatively impact economic growth for the remainder of the year. Historically, Mexico’s economy grows faster in the first half of presidential election years, slowing down in the second half due to pre-transition spending adjustments.
Projected Economic Outlook
The IMEF projects a more noticeable decline until 2025. This is a result of the budget deficit having to be reduced; by 2024, it is expected to have dropped to 5% of GDP, a level not seen since 1988. The Manufacturing Indicator, which stood at 49.8 units in May, increased by 0.7 points from the previous month but stayed on the verge of the contraction zone. To 50.1, the trend-cycle series dropped 0.1 points. After accounting for company size, the indicator rose by 1.9 points to 50.5 units, signifying 40 months in a row in the expansion zone, albeit at a slower rate, according to Forbes,.
Manufacturing Sector Analysis
The manufacturing sector indicator adjusted by company size returned to the expansion zone in May, after contracting in April and ending a 30-month expansion streak. The IMEF noted, “The results suggest that the manufacturing sector has stagnated at the beginning of the second quarter of 2024. The May data confirms the lower dynamism reported in recent months.”
Non-Manufacturing Sector Performance
The IMEF Non-Manufacturing Indicator saw a marginal decrease of 0.1 points in May compared to April, closing slightly above the threshold of 50 units. Although it remains in the expansion area (above 50), the non-manufacturing indicator has lost strength recently and is close to crossing into contraction. The trend-cycle series fell from 50.8 to 50.3 units, while the indicator adjusted by company size decreased by 0.3 points to 50.7 units. Both indicators have stayed in expansionary territory for 40 and 33 months, respectively, but have lost significant momentum.
Conclusion
The IMEF’s findings underscore that while the services and commerce sectors continue to drive economic dynamism, their growth has slowed in recent months, signaling a broader stagnation in Mexico’s economic growth trajectory.
