Banxico cuts economic growth Forecast to 2.2% for 2022

  • Banxico sees gross domestic product expanding 2.2% for this year in the main scenario of its quarterly inflation report released Wednesday. That’s below the 2.4% expected in its previous report three months ago. By 2023, the economy is seen growing at 2.4%, also lower than the 2.9% estimated before.

Growth has been lackluster in Latin America’s second-largest economy despite the revival of export-focused manufacturing and the services sector. Slower activity has been explained in part by President Andres Manuel Lopez Obrador’s austerity, which put a lid on public spending and debt, in contrast to heavy US government expenditures that kept many households afloat.

The bank maintained the inflation forecast announced in its May policy meeting, with price growth peaking at 7.6% in the second quarter of 2022, before slowing to 6.4% in the final part of the year.

The central bank last month hiked its key rate by a half-point for a fourth straight meeting and an eighth straight time overall to 7%, matching the aggressive response by policymakers across Latin America in coping with the sharpest surge in prices in a generation.

Governor Victoria Rodriguez Ceja emphasized in a press conference that a record hike of 75 basis points is “on the table” for the board’s next decision this month. The gap between the US and Mexico’s interest rates is large and could increase further, Rodriguez said.

Source: El Financiero

Mexico Daily Post