2024–2026 Outlook: No Landing Worldwide, Plan C Lite in Mexico

Genevieve Signoret & Delia Paredes

Editor’s note: A week ago, we shared our outlook for the global economy and Mexico in Spanish. Today we share our translation to English. Please note that, while translating, we decided to clarify a few points. This means that the Spanish original has been revised slightly. Feel free to consult it here. 

Introduction

We present our global outlook and our outlook for Mexico for the next eight quarters.

To forecast, we take a multi-scenario approach. In this instance, we visualize three scenarios for the global economy and two for Mexico.

In No Landing (subjective probability = 70%), which is our global base case, throughout the forecast horizon, economic activity continues to expand, inflation and rates come down slowly, and the equity bull market continues.

In Roller Coaster, our worst and least likely case (5%), inflation resurges this summer, leading central banks to raise interest rates, which in turn triggers a recession and an equity bear market.

In Soft Landing (25%), growth slows all the way down to a stop before reaccelerating.

To build these three scenarios, we made assumptions as to how expansive is U.S. fiscal policy, how restrictive is monetary policy, and whether the disinflation process underway can in fact be sustained.

To build our two scenarios for Mexico, we assumed our base global case, No Landing. Our base case for Mexico is called Plan C Lite (subjective probability = 65%), whereas our more pessimistic and less likely scenario is called Plan C Radical (35%).

“Plan C”, recall, refers to a group of constitutional reforms that outgoing President Andrés Manuel López Obrador and the incoming president, Claudia Sheinbaum, wish to push through during September. In September, the newly elected Congress will have been seated, but Sheinbaum will not yet have taken office.

What distinguishes our two cases for Mexico is how radical or moderate we assume the version of Plan C finally approved in September to be. Continue reading here.

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