It’s much better for the peso to move than for the “entire” Mexican economy to move: IMF

The director of the Western Hemisphere Department of the International Monetary Fund (IMF), Rodrigo Valdes, played down this Friday the fluctuations that have plagued the currency fund. Mexican Peso in recent weeks as a result of a possible delay in interest rate cuts by the Federal Reserve and rising tensions in the Middle East.

“The exchange rate moves with shocks and it’s much better to move to get the whole economy moving,” Rodrigo Valdez said at a press conference.

He explained that what has happened in recent weeks, and especially in the last 10 days, is that “the markets think the Fed may delay expected rate cuts“.

This is due to inflation and also because they are a strength of the US economy and it will probably cause some movements, but I would say that this is a normal part of how the macroeconomic framework is set so that there are no more problems,” he said.

From a more macroeconomic perspective, he added, “The central bank has done a very good job.”. “We think its fiscal policy is more pro-cyclical this year and we would have preferred to see something different, but that is already happening, although we expect significant consolidation by 2025,” he added.

The Mexican peso received the nickname last year “superweight” after recording a record rise of nearly 13% against the US dollar.

Last Tuesday in its latest survey of economic forecasts The IMF lowered its growth forecast for the Mexican economy by three tenths for 2024the last year of Andrés Manuel López Obrador’s presidency, and estimated it at 2.4% of GDP.

The fund also revised down Mexico’s 2025 GDP growth forecast, which will be 1.4% one-tenth less than forecast in January.

Forecasts for the next two years below the growth rate of 3.2% what the Mexican economy has experienced in 2023 and indicates a gradual slowdown in economic growth.

The IMF attributed this downward revision to the fact that the Mexican economy had weaker results than expected in late 2023 and early 2024, which he attributes to a contraction in the manufacturing sector.

Moreover, he hopes that Mexico tightens its fiscal policywhich will lead to lower growth rates in 2025.


Source: Aristegui Noticias