The Bank of Mexico raised its forecasts for economic growth this year and next, citing resilience in demand for Mexican exports, robust domestic consumption and plans for increased government spending in 2024.
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MEXICO CITY—The Bank of Mexico raised its forecasts for economic growth this year and next, citing resilience in demand for Mexican exports, robust domestic consumption and plans for increased government spending in 2024.
The central bank said Wednesday it expects gross domestic product, a measure of output in goods and services, to expand 3.3% this year, up from its previous estimate of 3%. For 2024, the bank raised its growth forecast from 2.1% to 3.0%. The bank estimates growth in 2025 will slow to 1.5%.
“In the third quarter, economic activity performed better than expected as a result of resilience in external demand and growth in domestic spending,” the bank said in its quarterly report.
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Mexico’s economy has been growing above expectations, supported by solid demand for exports and a recovery in fixed investment, while rising employment and record remittances have bolstered household consumption.
GDP expanded 1.1% seasonally adjusted in the third quarter from the previous quarter in an eighth consecutive period of growth. In the first nine months of the year, GDP grew 3.4% from the same period a year earlier.
The higher growth forecast for 2024 responds to the planned increase in Mexican government spending, as well as expectations that the slowdown in the U.S. economy will be less pronounced than previously thought, the bank said.
Presidential elections are due to be held in Mexico in June. “Growth is expected to be biased toward the first half of the year, as has been observed in previous electoral periods,” the bank said.
The Bank of Mexico has held its benchmark overnight interest-rate target at a record-high 11.25% since March. But at its November meeting the bank softened its tone, saying in a statement the rate would be held at that level “for some time” instead of “for an extended period.” The shift reinforced expectations of a first interest-rate cut in the first quarter of 2024.
The bank’s inflation forecasts were unchanged from those included in the most recent monetary policy statement. The bank sees inflation ending this year at 4.4%, and gradually easing to its 3% target in the second quarter of 2025.
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