Banxico Dispels Trade Fears Amid Moderate Growth Forecast

The Bank of Mexico, known as Banxico, refuted U.S. concerns about China's rerouting exports through Mexico and projected moderate economic growth. Despite Trump's tariff threats, Banxico predicts 1.8% GDP growth in 2024 and steady outlook for 2025 while constantly monitoring the peso's volatility due to potential U.S. policies.

The Bank of Mexico presented important data on Wednesday, countering U.S. apprehensions that China might be exploiting Mexico to bypass trade barriers for its goods, while also predicting a 'moderate' economic growth trajectory in the forthcoming years.

An analytical examination of trade patterns indicated that the share of U.S. imports supposedly rerouted from China to the U.S. through third countries remains negligible, with Mexico's contribution being even smaller. Banxico, as the Mexican central bank is colloquially referred to, delivered these insights in its first report presentation since Donald Trump's election victory earlier this month.

Amid Trump's threats of a 25% tariff on goods from Mexico and Canada, Mexico warned of retaliatory actions that could cut 400,000 U.S. jobs. Banxico Governor Victoria Rodriguez highlighted the peso's volatile fluctuations due to tariff threats, though noted there had been no need for forex market intervention. The bank forecasted a modest but improving economic growth, slightly revising 2024 GDP growth to 1.8% based on unexpected third-quarter gains, and maintained a steady forecast for 2025.

(With inputs from agencies.)