He Bank of Mexico (Banxico) raised its forecast for growth this Wednesday to 2.3% gross domestic product (GDP) by 1.6% for 2023 compared to the previous forecast, on the back of higher-than-expected growth in the first quarter.
In its January-March 2023 Quarterly Report, the central bank assessed the central scenario 2.3% growth with a lower limit of 1.7% and an upper limit of 2.9%.
On the contrary, the autonomous organism has decreased to 1.6% its central GDP forecast for 2024 is down from the previous estimate of 1.8%.
The improved outlook for 2023 comes after last Friday’s confirmation that economy Mexico grew 1% qoq and 3.7% y/y in the first quarter of the year, above analysts’ expectations.
“The growth of the Mexican economy in the first quarter of 2023 was higher than expected in the previous report, which indicates the resilience of the national economy. This increases the growth base until the end of the year and gives rise to an upward revision,” the Central Bank said in a report.
Governing body de Banxico also improved its forecast for inflation in general, what will now be the average 4.7% in the last quarter of 2023 compared to the previous forecast of 4.9%.
The central bank expects annual headline inflation to have already passed its ceiling. “beak” in the first quarter of this year, when it averaged 7.5%, before declining later in the rest of 2023.
However, he argued that inflation will not reach a level close to 3%Banxico target, before the fourth quarter 2024.
“Inflation in Mexico is slowing as the effects of the turmoil it has endured ease and take into account monetary policy measures. Consequently, the most recent headline and core inflation forecasts have made minor adjustments.
In this context, Banxico justified its monetary policy, which on May 18 led to the preservation of interest rate by a record 11.25%, surpassing 15 consecutive target increases in the face of headline inflation, which fell to 6.25% in April, the lowest level since October 2021.
The central bank also forecasts the creation of 600,000 to 800,000 formal jobs this year related to Mexican Institute of Social Security (IMSS)above the previous range of 420,000 to 620,000.
“In the interests of the well-being of the population, in order to ensure greater economic growth, it is important to maintain a favorable environment for increased investment and an adequate allocation of resources,” the report says.
Source: Aristegui Noticias
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
