IMF sees Mexico's economic growth slowing to 1.5% this year

MEXICO CITY (Reuters) - The International Monetary Fund (IMF) estimates that Mexico's economic growth will slow to around 1.5% this year before dipping to just 1.3% in 2025, according to the international lender's updated forecasts released on Friday.

The IMF noted that sustainable and inclusive growth in Latin America's No. 2 economy will require a "broad set of reforms."

Economic expansion in Mexico was moderating because of both "capacity constraints and restrictive monetary policy," it said in a statement.

The updated forecasts follows the approval of the current two-year flexible credit line arrangement the IMF has with Mexico, equivalent to about $35 billion.

Despite higher government spending, the IMF pointed out that private sector consumption and investment is decelerating, as is employment growth.

"(Economic) growth is expected to moderate further in 2025, reflecting a withdrawal of fiscal stimulus and a slowdown in the U.S.," according to the statement.

"Inflation pressures are receding, and continued monetary restraint and slowing activity are expected to lower inflation to Banxico's 3-percent target by 2025," it added.

The IMF also sees Mexico's government budget deficit increasing substantially this year, and gross public sector debt rising to 58% of GDP by the end of the year.

(Reporting by Stefanie Eschenbacher; Editing by Stephen Eisenhammer and David Alire Garcia)

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