Saturday, January 28, 2023

The Bank of Mexico raises the growth forecast for the country to 3%

The Bank of Mexico (Banxico) raised its forecast for growth of the Mexican gross domestic product (GDP) in 2022 to 3% on Wednesday, as well as to 1.8% in 2023.

In its “July-September 2022 Quarterly Report” a central growth scenario for 2022 of 3% was estimated, with a lower limit of 2.8% and an upper limit of 3.2%.

For 2023, Mexico’s central bank has now projected central GDP growth of 1.8%, with a minimum scenario of 1% and a maximum of 2.6%.

This represented an increase with respect to the central scenarios of 2.2% for 2022 and 1.6% for 2023 that he estimated in his latest projection of the Mexican economy in the previous quarter.

“The revision for 2022 responds, mainly, to the dynamism that the national economy has been showing throughout the year and that manifested itself in a growth in the third quarter that was higher than anticipated,” Banxico stated.

Likewise, the Mexican central bank anticipated that this higher level of economic activity also derives “in a greater base for growth in 2023.”

“However, by 2023 Mexico is now expected to face lower external demand, which partially offsets the upward arithmetic effect derived from the higher growth base,” he warned.

The new forecast is published after revealing last Friday that Mexico’s GDP in the third quarter advanced 0.9% quarterly and 4.3% year-on-year, accumulating growth of 2.9% in the first three quarters of 2022.

On the other hand, the Governing Board of Banxico raised its forecast for general inflation, which would now average 8.3% per year in the last quarter of 2022, compared to the past forecast of 8.1%.

The Central Bank expects annual headline inflation to fall from the fourth quarter of the year and to present “more noticeable decreases” throughout 2023.

According to the latest Banxico report, inflation in Mexico continues to face “a complex environment”, in which the effects of the shocks caused by the pandemic and the war between Ukraine and Russia have deepened and lasted longer than expected. .

“Putting pressure on production costs, in a context of still high demand worldwide,” considered the Mexican autonomous body.

For its part, core inflation, which eliminates in the calculation the price of more volatile products, goods and services, such as energy, is expected to begin to fall from the first quarter of 2023 to reach the target of 3% in the third quarter of 2024.

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