BUENOS AIRES, July 24 (Reuters) – Mexico’s economy will likely slow in step with an expected moderation of growth in the United States, but the decline could be limited by increased investment from companies relocating to the Latin American country, a Reuters poll showed.
Gross domestic product (GDP) in Mexico expanded more than forecast from the second half of 2022 to the start of this year, as low unemployment supported private consumption and remittances hit record highs, driving a strong “super” peso.
However, the region’s second-largest economy after Brazil is set to decelerate in coming quarters along with an anticipated cooling in the U.S. following a string of rate hikes by the Federal Reserve that is expected to draw to an end.
Mexican GDP growth will probably fall from 2.3% this year to 1.5% in 2024, according to the median estimates among 30 analysts polled in the July 10-20 period. This still would represent an upgrade for the two years combined, from the forecasts in the April poll of 1.5% and 1.6%, respectively.
“Although consumption has slowed, it remains close to all-time highs due to rising real wages, greater optimism from lower inflation, a stronger exchange rate, and government transfers,” said Banco Base analyst Gabriela Siller.
The Mexican central bank is expected to hold its key interest rate at a record 11.25% until the last three months of 2023, when a small cut of 25 basis points is anticipated, as inflation stays relatively elevated close to the 5.0% mark then.
Loading…
Source: www.reuters.com
ENB
Sandstone Group
