IMF sees Mexico economic growth slowing in 2024, 2025

MEXICO CITY (Reuters) -The International Monetary Fund on Tuesday said it sees Mexico's economic growth slowing to around 1.5% this year, citing capacity constraints and tight monetary policy.

Growth is seen slowing to 1.3% in Latin America's second-largest economy next year, the IMF said in a statement, when inflation is also expected to close in on the central bank's target of 3%.

Mexico's central bank, known as Banxico, lowered its benchmark interest rate to 10.50% in a split decision in September.

But minutes from the meeting showed that the board members expect easing inflation could allow for further rate cuts.

"Inflation risks remain on the upside," the IMF said, warning that weaker-than-expected economic growth in the United States, increased global risk aversion and unforeseen effects from recent reforms could weigh on Mexico's output.

When asked about the IMF projections, Mexico's new President Claudia Sheinbaum said the country's "economy is strong," adding that agricultural production is expected to grow next year.

The president also said that none of the proposed constitutional reforms pose a problem for investment in Mexico, despite the IMF's concerns.

The IMF said that a recent judicial overhaul creates "important uncertainties about the effectiveness of contract enforcement and the predictability of the rule of law."

Mexico's ruling party and allies pushed the reform through last month, arguing that it will reduce corruption in the judiciary by implementing the popular election of judges and magistrates.

But the reform has sparked concerns from major trade partners like the U.S. and Canada and protests from judges and magistrates.

(Reporting by Kylie Madry and Aida Pelaez-Fernandez; Editing by Bill Berkrot)