BBVA bank this Thursday increased its growth outlook for the Mexican gross domestic product (GDP) for 2023, from 0.6% to 1.4%y predicted that inflation whose rate dropped to 7.12% in the first half of March, It will continue with that downtrend.
In the presentation of the “Situación México” report, corresponding to the first quarter of the year, BBVA analysts also forecast growth of 2.2% for 2024.
The upward forecast for this 2023 occurs because The bank considers that private spending will increase thanks to the increase in gains in real wages and employment.
“Salary reviews and the expectation of lower inflation will be key to maintaining the growth rate of real wages and the wage bill, which will benefit household consumption,” the document said.
This will help mitigate the lower dynamism of manufacturing due to the slow growth of external demand.
“Manufacturing will lose ground due to the lower demand for goods and services from the United States“said Carlos Serrano, chief economist at BBVA Mexico, at a conference.
The outlook was not rosy for the construction sector either, which remains 12% below its pre-pandemic level.
While yes it will grow fastthe report predicted, investment in the machinery and equipment sectors due to “nearshoring” or relocation of companies.
Likewise, the levels of formal employment will increase, at a slower rate compared to last year.
DOWNWARD INFLATION
After the National Institute of Statistics and Geography (Inegi) announced this Thursday that the general inflation rate fell to 7.12% per year in the first half of March, BBVA analysts estimated that this trend would continue.
“Inflation continues to fall and (the drop) will be more pronounced in the coming months,” Serrano said.
According to the reportheadline inflation will close the year at 4.8%, while the underlying in 4.7%.
Regarding the position of the Bank of Mexico (Banxico), analysts indicated that it will maintain a “very restrictive” position during this year and the next, despite the drop in inflation.
Therefore, they predicted that at its meeting next week Banxico will resume the rate of interest rate hikes to 25 points until it reaches 11.5%.
According to the interest rate of the US Federal Reserve, Serrano estimated that it will increase once more in the coming monthsto then start a period of decline from 2024.
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