Bank of Mexico cuts forecast for economy in 2023, 2024

MEXICO CITY, March 1 (Xinhua) -- The Central Bank of Mexico (Banxico) cut its forecast for the growth of the country's economy in 2023 and 2024, due to a deterioration of U.S. expectations, especially in the industrial sector, an inflation report released Wednesday said.

The bank now forecasts economic growth of 1.6 percent for Mexico in 2023, lower than the 1.8 percent predicted in the previous report, while for 2024 the projection is reduced to 1.8 percent, from 2.1 percent.

"The lower growth expected for 2023 and 2024 ... is mainly due to a deterioration in growth expectations for the U.S. economy, especially for its industrial activity," Banxico governor Victoria Rodriguez explained during a virtual conference.

The central bank added that this will be reflected in a reduction of Mexico's external demand and a slowdown in the country's productive activity.

The balance of risks remains biased to the downside, given the complex environment expected for the global economy and the possibility of a deep and lasting recession in the United States, among other risks, it continued.

Regarding inflation, the central bank indicated that Mexico's situation "continues to be complex" given the deep, generalized and lasting shocks it suffered due to the COVID-19 pandemic and the armed conflict in Eastern Europe.

Banxico forecasts that inflation will stand at 4.9 percent in year-on-year variation at the end of 2023, higher than the 4.1 percent projected in the previous report, while for the end of 2024, it will be 3.1 percent, congruent with the official target of 3.0 percent.