LatinNews Daily - 02 March 2023

In brief: Mexico’s Banxico cuts growth forecast

* In its latest quarterly report (October-December 2022), Mexico’s central bank (Banxico) has cut its growth forecast for Mexico to 1.6% in 2023, down from the 1.8% growth that it forecast in its previous report released at the end of November 2022. For 2024, Banxico is forecasting GDP growth of 1.8%, down from 2.1% as per its previous forecast. Mexico’s GDP grew 3.1% in 2022. In its report Banxico notes that while economic activity continued expanding in the fourth quarter of 2022 (0.46%) compared with the previous quarter, this reflected a slowdown compared with the dynamism shown in the previous three quarters which saw growth of 0.91% in the third quarter, 1.08% in the second, and 1.17% in the first. While noting a decline in inflation, which was running at 7.76% in annual terms last month, the Banxico report also highlighted “a more complicated inflationary panorama than previously thought” – as evidenced in its decision to raise interest rates to 11% last month, an increase of 700 basis points since the current raising cycle began in June 2021. The latest Banxico report expects inflation to close 2023 at 4.9%, down from 4.1% in the previous forecast (since raised to 4.9% in the statement accompanying the decision to raise interest rates last month).

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