Banxico cuts its 2023 GDP growth forecast to 1.6%.

Bank of Mexico (Banxico) cut its 2023 gross domestic product (GDP) growth forecast to 1.6% this Wednesday from a previous forecast of 1.8%. against the backdrop of a slowdown in the US economy.

In his “Quarterly report for October-December 2022.“The central bank has estimated a 1.6% central growth scenario with a 0.8% floor and a 2.4% ceiling.

The autonomous body also lowered its central GDP forecast for 2024 to 1.8% from the previous estimate of 2.1%.

“For 2023 and 2024, growth is expected to be lower than what was projected in the previous report. This is mainly due to deteriorating expectations for the growth of the United States economy and, especially, its industrial activity.detailed report.

On the other hand, Banxico’s board of governors raised its headline inflation forecast to now average 4.9% per annum in the last quarter of 2023, compared to the previous forecast of 4.1%.

The central bank expects annual headline inflation to reach its “peak” in the first quarter of this year, at 7.7%, and then decline until the end of 2023.

inflation will not reach close to 3%, Banxico’s target, until the fourth quarter of 2024.

“Core inflation unexpectedly rose, remains at a high level and does not show a clear downward trend. The balance of inflation risks over the forecast horizon remains skewed upwards.

In this context, Banxico justified its monetary policy, which on February 9 led to an increase in the interest rate to a record 11%, which is the fourteenth consecutive increase in the target, taking into account headline inflation, which reached 7.91% in January last year.

Forecasts showed a slowdown in economic growth after the National Institute of Statistics and Geography (INEGI) reported last week that GDP grew by 3.1% in 2022.

central bank He also predicts between 420,000 and 620,000 formal jobs will be created this year. associated with the Mexican Institute of Social Security (IMSS), below the previous interval, which increased from 450,000 to 650,000

“Is Measures must be taken that support domestic growth and create an environment conducive to increased investment. and an adequate allocation of resources to improve the country’s productivity,” the report concluded.


Source: Aristegui Noticias