MEXICO CITY 01-Dec-2022 .-Specialists in private sector economy consulted by the Bank of Mexico (Banxico) in November improved their forecast for the country’s economic growth in 2022 and foresee a lower rate of inflationas well as an exchange rate below the 20 pesos at the end of the year.
The analysts revised upwards their expectation of expansion of the Gross Domestic Product (GDP) of the Country to 2.80 percent per year in this year from 2.10 percent prior. However, they lowered their estimate for 2023 from 1 to 0.95 percent.
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At a general level, they mentioned that the main factor that could hinder the growth of Mexico in the next six months is associated with a lack of governance, particularly with the public insecurity problems and the internal political uncertainty.
Under this scenario, the 65 percent of the specialists considered that the business climate in the country will worsen in the next six months, while a 59 percent indicated that it is a bad time to make investments.
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On consumer prices, they anticipate that the rate of inflation general annual end of the year in 8.36 percentnumber less than 8.50 percent previously estimated, making it its first downward revision since July 2021.
However, they anticipate continued pressures on the core index as they have raised their forecast for 8.29 to 8.37 percent.
The Underlying inflation is a relevant index for Banxico since they are the set of prices most susceptible to the monetary policy actions. In addition, it determines the course of general inflation in the medium and long term.
As for the exchange rate, analysts expect it to be at 19.99 pesos per dollar at the end of the year, 41 cents less with respect to the previous estimate (20.40 pesos). It is the first time that this forecast is below the level of 20 pesos since February 2020.
The current appreciation of the peso corresponds to various factors, one of which is the entry of foreign currency to Mexico by remittance concept, exports and foreign investment. Another of them is due to lower risk aversion globally, which weakens the dollar against its crosses.
However, Gabriela Siller, director of Economic Analysis of Banco Base, highlights that the exchange rate is not a thermometer to measure the mexican economy not a contributing factor GDP expansion since its fluctuation depends mostly on what happens globally.
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According to the latest triennial survey of the Bank for International Settlements (BIS)the global trading volume of the Mexican peso stands at 114 billion dollars per day, making it one of the most traded currencies globally.
The dollar is sold this Thursday at 19.65 pesos retail in Citibanamex, 12 cents less than yesterday, and buy at 18.58.
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