Narayan AmmachchiThe Organization for Economic Cooperation and Development (OECD) cut Mexico’s growth forecast for the 2023-2024 fiscal year, despite the country overtaking China’s spot as the US’ top trading partner.
The OECD expects the Mexican economy to grow by 2.5%, down from its previous prediction of 3.3%.
Mexico’s pace of growth slowed down in the fourth quarter of 2023, with GDP increasing by only 0.1% compared to the previous quarter. This slowdown was caused in part by inflation and high interest rates, which dampened economic activity in the tail-end of the year.
However, there are positive signs for the Mexican economy. The country is benefiting from the nearshoring boom, as more and more companies move production facilities to Mexico, where they can be closer to the US market.
Additionally, investment in major infrastructure projects such as the Mayan Train is boosting growth.
An increasing number of Chinese companies are also setting up operations in Mexico to cater to their US clients. For example, a Chinese refrigerator maker recently began construction of a large, US$260 million manufacturing facility in the country.
Chinese automobile companies JAC Motors and SAIC Motor have also announced plans to build assembly plants in the country.
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