Thursday, March 23, 2023

Private sector raises Mexico’s growth forecast to 1.16% in 2023

Private sector experts raised the growth forecast for the Mexican gross domestic product (GDP) to 1.16% for 2023 from a previous estimate of 1%, as revealed on Thursday by the February monthly survey of the Bank of Mexico (Banxico).

In addition, the forecast for 2024 grew to 1.74% from a previous estimate of 1.68%, according to the 36 domestic and foreign research and consulting groups that participated in the central bank survey between February 21 and 28.

These projections are released after revealing last week that GDP grew by 3.1% annually in 2022 driven by all sectors and above the first estimates, according to the National Institute of Statistics and Geography (Inegi).

On the other hand, the experts increased their outlook for the general inflation rate to 5.34% at the end of 2023, while the previous month they projected that it would end the year at 5.19%.

This forecast comes after it was announced that the Mexican inflation rate rose to 7.91% in January, the highest annual start in two decades, after ending last year at 7.82%, its highest close since 2000.

For 2024, they also raised the projection from 3.98% to 4.09%.

As factors that could hamper economic growth in Mexico in the next six months, the experts highlighted governance (46%), internal conditions (18%) and inflation (16%) at a general level.

While at a particular level they mentioned the problems of public insecurity (22%), inflationary pressures in the country (12%), the absence of structural change (8%) and internal political uncertainty (8%).

Regarding the exchange rate, analysts estimated that the Mexican peso will close 2023 at 19.73 units per dollar, lower than the previous projection of 20.11 pesos per US bill.

By the end of 2024, analysts now calculate that the Mexican currency will be exchanged at 20.22 units per dollar, lower than the estimate of 20.62 of the previous month.

The levels prior to the pandemic were close to 18.5 pesos per dollar.

As for the external sector, for 2023, expectations regarding the trade balance were revised from a deficit of US$22,489 million to one of less than US$21,747 million.

The foreign direct investment (FDI) forecast for 2023 grew slightly from a projection of US$33.825 million to a higher projection of US$34.310 million.


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