Bank of Mexico Revises Growth and Inflation Forecasts Amid Economic Challenges

The Bank of Mexico has lowered its economic growth forecasts for 2023 and 2024 due to lower-than-expected second-quarter growth and ongoing inflation. GDP growth is now predicted at 1.5% for 2024, down from 2.4%, and 1.2% for the following year. The central bank also adjusted its inflation forecasts slightly upwards.

The Bank of Mexico has amended its economic growth forecasts for this year and the next, citing stubborn inflation and weaker external demand, particularly from the U.S. manufacturing sector, as key factors. The central bank's quarterly report, released on Wednesday, disclosed the updated figures.

According to the report, the central bank now anticipates a GDP growth of 1.5% in 2024, a significant drop from the previous 2.4% forecast. For the following year, growth is expected at 1.2%, revised down from 1.5%. This adjustment follows a second-quarter performance that fell 'significantly' short of expectations.

Concurrently, Banxico has slightly increased its fourth-quarter core inflation projection for this year to 3.9% from 3.8%, maintaining the 2025 prediction at 3%. Both headline and core inflation rates have remained stubbornly high, driven by rises in produce and energy prices and persistent services inflation, although discussions on lowering the benchmark interest rate may soon be feasible.

(With inputs from agencies.)