2024-07-05 00:54:53
According to the Survey of Expectations of Private Sector Economic Specialists of the Bank of Mexico, the exchange rate is expected to be 18.73 pesos per dollar at the end of 2024 (17.80 a month earlier), and the interest rate cut is expected to be up to 75 basis points by the end of the year, which places it at 10.25% (previously 10.00%).
An analysis by Citibanamex highlighted that these results reflect the incorporation into analysts’ expectations of the financial volatility shown in June, following the announcement of the results of the June 2 elections.
“Slightly lower growth is also expected and as for GDP, analysts believe that its expansion in 2024 will be 2.0% (previously 2.1%), and slightly lower for 2025 (1.78% from 1.80% previously).”
Inflation projections remain stable for 2024 and 2025. This year, general inflation is expected to be 4.23% and underlying inflation is expected to be 4.01%. For 2025, general inflation is expected to be 3.76% and underlying inflation is expected to be 3.78%.
According to respondents, the factors that could hinder Mexico’s economic growth in the next six months are internal political uncertainty (18% of respondents); public safety problems (14%); other problems related to the lack of rule of law (10%); the absence of structural change in Mexico (8%); and corruption (8%).
Citibanamex highlighted that there is a certain pessimism in reporting that 50% of respondents believe that the business climate will remain the same in the next 6 months, and the remaining 50% that it will worsen.
In turn, 73% responded that the economy is currently no better than it was a year ago, and only 10% considered that the current situation is suitable for making investments.
Finally, analysts consider crime, lack of rule of law, corruption and inadequate infrastructure provision (in that order) to be the main obstacles to doing business in Mexico.
In this regard, Banco Base said that a possible change in trend is expected among specialists regarding the evolution of the economy in the short term, derived from the results of the elections in Mexico, “as well as the uncertainty of the upcoming elections in the United States.”
He stressed that the probability of Joe Biden withdrawing from the electoral race is high, since in the last debate, the president in office showed clear difficulties in arguing against Donald Trump, in addition to making errors in numbers and syntax, raising doubts about his ability to continue governing.
In this context, it is quite possible that Trump will win the presidential election and although this is no longer as big a risk for Mexico as it was in 2016, it could lead to greater volatility in the exchange rate.
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2024-07-05 00:54:53