Analysts from the Fitch rating agency estimate that the Mexican economy will register growth of 1.4% in 2023, which is similar to the forecast they had in September.
This forecast incorporates the expectation of a slowdown from the 3% that they estimate will be achieved in GDP growth this year.
Just last Wednesday, the Bank of Mexico revised its forecast for Mexican economic activity upwards. Now they estimate that the GDP will register an increase of 1.8% in 2023, which is slightly higher than the 1.6% forecast by themselves in August.
In Fitch’s updated expectations, they forecast that the United States will register a 0.2% advance in the whole of next year that incorporates the expectation of a slight recession from the second quarter of 2023.
In their expectation update, they warn that “high inflation could derail the solid performance of consumption if it persists at current levels, affecting the context already weakened by sluggish investment.”
Although they find that private investment is close to pre-pandemic levels, they stressed that it is 10% below its previous maximum, of July 2018.
“Weak business confidence is partly related to regulatory uncertainty, particularly in the electricity sector,” they said.
They find in nearshoring an important growth opportunity for Mexico given the growing tensions between the US and China and the desire of manufacturers to cut the distance with supply chains and make them resistant to current distortions.
Taming inflation, more difficult
They anticipate that Banxico will continue tightening its monetary policy to avoid “a further unanchoring of inflation expectations in the context of stubbornly high inflation” and they anticipate that the rate will reach 10.50% by the end of the year, which will help bring inflation to 4.2 % in 2023 and anticipate that not even in 2024 will the specific objective of 3% be touched, since they anticipate that a variation of 3.5 percent will be reached.
They explained that the global battle against inflation has intensified.
“Controlling inflation is proving more difficult than expected as price pressures broaden and take hold. We know it will not be good for growth but it is clear that central bankers are required to take off their gloves and keep doing what they have to do.
In the detail of the information, they project that Mexican economic activity will register a first significant slowdown since the fourth quarter of 2022, when they estimate growth of 0.3 percent.
For the first and second quarters, they anticipate that activity will continue to slow down to 0.2% quarterly in both registers and that it will be in the 3rd and 4th quarters that the Mexican GDP will pick up to 0.3 percent.
According to his calculations, there will be no negative readings in the course of the next year.
The context for business
In the analysis, they explained that the United States government began a consultation process under the T-MEC framework, alleging that recent decisions on energy and electricity matters contravene the agreement.
