Economics: Analysis of the recent evolution of the public finances and the main implications of the 2025 Economic Package
On November 15, the Ministry of Finance presented the Economic Package for next year, which includes the General Economic Policy Criteria for 2025 (CGPE) as well as the proposed Revenue Law and the Federal Expenditure Budget. In our opinion, the most important aspect of this package is the application of an inertial fiscal policy, which provides continuity to those policies implemented in the previous administration, prioritizing the completion of emblematic work projects or subsidizing their operation, as well as that of some of the programs created during this period.
The launching of new infrastructure work projects is proposed, especially railroad lines, without having calculated their economic and social profitability. Furthermore, increasing amounts of resources will continue to be earmarked to energy companies, particularly to Pemex, which is a bottomless pit insofar as no credible strategy has been established to reverse the increasing losses it is posting. This negatively affects the key basic services that the government should provide (education, health-care, etc.), as well as public investment that is economically and socially profitable. It should also be noted that there are several overestimates (revenue), underestimates (expenditures), assumptions that will be difficult to realize, and forced adjustments to the budget. In addition, there is a deficient spending structure that affects sustainable economic development.
This issue of the Economic Outlook analyzes the evolution of public finance as well as the macroeconomic framework proposed by the Ministry of Finance and explains the most important points in the 2025 fiscal package.
In the week's indicators, INEGI published the IGAE figures for September, which showed a downturn with respect to the previous month, only increasing an annual seasonally adjusted 0.8%. This can mainly be attributed to the construction segment, which fell -2.3% after declining -1.2% in August, and to the 1% growth posted in the services sector, which represents a clear weakening compared to previous months. Consumer inflation for the first half of November declined to an annual 4.56%, 20 bps lower than a month earlier, with a significant reduction in core inflation, which stood at an annual 3.58%. Retail sales decreased an annual 0.6% in September, a clear sign that private consumption has weakened in recent months.
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