Bank of Mexico cuts forecast for economy in 2023, 2024

MEXICO: The Central Bank of Mexico (Banxico) cut its forecast for the growth of the country's economy in 2023 and 2024, due to a deterioration of US expectations, especially in the industrial sector, an inflation report said.

The bank now forecasts economic growth of 1.6 per cent for Mexico in 2023, lower than the 1.8 per cent predicted in the previous report, while for 2024 the projection is reduced to 1.8 per cent, from 2.1 per cent, reports Xinhua news agency.

"The lower growth expected for 2023 and 2024 ... is mainly due to a deterioration in growth expectations for the US economy, especially for its industrial activity," Banxico Governor Victoria Rodriguez said.

The central bank added that this will be reflected in a reduction of Mexico's external demand and a slowdown in the country's productive activity.

The balance of risks remains biased to the downside, given the complex environment expected for the global economy and the possibility of a deep and lasting recession in the US, among other risks, it continued.

Regarding inflation, the central bank indicated that Mexico's situation "continues to be complex" given the deep, generalized and lasting shocks it suffered due to the Covid-19 pandemic and the armed conflict in Eastern Europe.

Banxico forecasts that inflation will stand at 4.9 per cent in year-on-year variation at the end of 2023, higher than the 4.1 per cent projected in the previous report, while for the end of 2024, it will be 3.1 per cent, congruent with the official target of 3.0 per cent.