Analysts consulted by the Bank of Mexico (Banxico) cut its growth forecast for Gross Domestic Product (GDP) for 2020, rising from 1.0 to 0.90%.
According to the results of the Survey on the Expectations of Specialists in Private Sector Economics, among the factors that could hinder Mexico’s economic growth over the next six months is internal governance and economic conditions.
Read: Banxico lowers interest rate to 7%, says economy has stalled
At the particular level, the main factors are problems of public insecurity; domestic political uncertainty; uncertainty about the domestic economic situation; weakness in the domestic market; weakness in the external market, and the global economy.
By 2021, the specialists consulted also lowered their forecast for the growth of the Mexican economy, from 1.70 to 1.60%.
While for inflation in 2020, analysts raised their expectation to 3.53%, up from 3.5% of the previous survey; they also estimate that the exchange rate is 19.50 pesos per dollar.
This forecast is in addition to that issued on 13 February by Banxico himself, which cut the benchmark interest rate from 7.25 to 7%, being the first reduction made in the year and the fifth in a row.
Banxico detailed that while global financial conditions have continued its relaxation, “the risk balance for global economic activity remains soured downwards in the presence of various uncertainty factors, including the effects of the recent coronavirus outbreak.”
Read: In 2020 there will be a ‘modest recovery’ although the economy will remain weak: Banxico
It indicated that economic activity in Mexico had remained stagnant for several quarters and weak, and that external and internal risks persist that could affect the performance of national financial markets.
To lower the interest rate, the Banxico Governing Board took into account the levels reached by headline inflation and its outlook for monetary policy, the wider slack conditions of the economy, and the recent performance of external and internal yield curves.
With information from Notimex.
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