Private sector economics specialists consulted by the Bank of Mexico (Banxico) predict a gloomy economic outlook heading into the end of the year, amid the political noise resulting from constitutional reforms and the change of government.
Regarding their view on economic growth this year, analysts brought their forecast for Gross Domestic Product (GDP) expansion closer to the 1.5 percent estimated by Banxico in its latest Quarterly Report, so they project an expansion of 1.6 percent for the national economy in 2024.
They pointed out that the biggest factor at the general level that could hinder economic growth in the next six months is the lack of governance, with 57 percent of the responses. Within the factor of lack of governance, the perception of the analysts about a greater internal political uncertainty increased from 14 to 21 percent of the responses, thus becoming the main factor at the individual level that could pose a risk for the expansion of the GDP, seconded by the problems of public insecurity.
Regarding the perception of the economic environment, eight out of 10 specialists surveyed responded that Mexico’s economy is worse than a year ago, seven out of 10 believe that the business climate will worsen in the next six months and six out of 10 considered that it is a bad time to make investments in the country.
Analysts expect a weaker national currency against the dollar, so that it would close the year at 19 units per US currency (22 cents more than the last estimate), according to a survey conducted by Banxico. Likewise, specialists estimate that the Bank of Mexico will make at least two cuts of 25 basis points each to its reference rate towards the end of the year, so that it would end 2024 at a level of 10.25 percent. Regarding general inflation, analysts revised upwards their estimate towards the end of the year from 4.58 to 4.64 percent, while for the underlying component – on which Banxico has based its monetary policy decisions – they reduced it slightly downwards from 3.97 to 3.90 percent. This survey was collected by Banxico among 41 economic analysis and consulting groups from the national and foreign private sector. The responses were received between August 15 and 29.
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