Mexico’s central bank cuts 2024 GDP forecast to 1.5% Reuters

MEXICO CITY (Reuters) – The Bank of Mexico cut its forecast for economic growth this year and next, according to the central bank’s quarterly report on Wednesday, amid stubborn inflation that has divided the central bank’s board.

The central bank now expects 2024 gross domestic product (GDP) growth of 1.5%, down from a previous forecast of 2.4%, and 1.2% growth next year from a forecast previous 1.5%.

Banxico, as the central bank is known, said it cut that forecast due to second-quarter growth coming in “significantly” below forecasts and noted that external demand should remain weak due to expected weakness in the manufacturing sector. USA production.

The monetary authority also raised its fourth-quarter core inflation forecast for this year to 3.9 percent from 3.8 percent, while keeping its forecast for 2025 at 3 percent.

Headline inflation, meanwhile, is expected to reach 4.4% by the final quarter of this year, up from an earlier estimate of 4%, while the figure for 2025 remains at 3% – the central bank’s target level .

The central bank highlighted expected price increases affecting products and energy, as well as stubborn services inflation, which the report said “remains elevated with no clear sign of abating”.

Annual inflation in the economy no. 2 of Latin America was 5.16% in the first half of August, gradually falling from a two-decade peak in 2022, while remaining stubbornly far from the 3% target.

However, the bank said in its report that it expects the inflationary environment to allow for talks on further cuts in the benchmark interest rate.