The Bank of Mexico (Banxico) on Wednesday raised its forecast for gross domestic product (GDP) growth to 2.3% for 2023 from a previous forecast of 1.6% given better-than-expected growth in the first quarter.
In its “Quarterly Report January-March 2023”, The central bank estimated a central growth scenario of 2.3% with a lower limit of 1.7% and an upper limit of 2.9 percent.
In contrast, the autonomous body lowered its central projection of GDP for 2024 to 1.6%, from a previous estimate of 1.8%.
The improved outlook for 2023 occurs after confirming last Friday that the Economy of mexico it grew 1% quarterly and 3.7% year-on-year in the first quarter of the year, higher than analysts’ expectations.
“The growth of the Mexican economy in the first quarter of 2023 was higher than anticipated in the previous report, as a reflection of the resilience of the national economy. This increases the base of growth for the rest of the year and gives rise to an upward revision,” the central bank stated in its report.
Banxico’s Governing Board also improved its forecast for general inflation, which would now average 4.7% annually in the last quarter of 2023, compared to the past forecast of 4.9 percent.
The Bank of Mexico expects annual headline inflation to have already passed its “peak” in the first quarter of this year, when it averaged 7.5%, to then decline in the remainder of 2023.
Still, he maintained that the inflation it would not reach levels close to 3%, Banxico’s goal, until the fourth quarter of 2024.
“Inflation in Mexico has been moderating as the effects of the shocks it has received have faded and in view of the monetary policy actions. Consequently, the most recent headline and subjacent inflation forecasts have presented minor adjustments,” stated the document.
With this context, Banxico justified its monetary policy, which on May 18 resulted in keeping the interest rate unchanged at a record 11.25%, thereby breaking the 15 consecutive increases in the target given general inflation, which fell in April to 6.25%, its lowest level since October 2021.
The central bank also projected for this year the creation of between 600,000 and 800,000 formal jobs, affiliated with the Mexican Institute of Social Security (IMSS), above the previous interval that went from 420,000 to 620,000.
“For the benefit of the well-being of the population, to promote greater economic growth it is essential to maintain a favorable environment to generate greater investment and an adequate allocation of resources,” the report concluded.
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