Mexico Economic Forecast

Mexico Economic Outlook

April 19, 2016

Economic growth is holding up well at the beginning of the year. A modest expansion in economic activity in January eased concerns raised by the latest Q4 GDP data that the economy may be decelerating more rapidly than expected. Meanwhile, the manufacturing sector continued to be robust in Q1 and received an extra boost from its U.S. counterpart in March. Moreover, consumer confidence improved timidly in March, although it remains weak despite low inflation, growth in employment and a strong influx of remittances. On a negative note, Moody’s downgraded Mexico’s A3 credit rating from stable to negative on 31 March, citing the potential impact of external headwinds on the government’s fiscal consolidation measures. The government recently released a preliminary draft of its Macroeconomic Framework for 2016 in which it outlines the design for next year’s budget and continues to highlight the importance of fiscal consolidation.

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Mexico Facts

ValueChangeDate
Bond Yield5.900.0 %May 03
Exchange Rate17.612.36 %May 03
Stock Market45,648-0.13 %May 03

Mexico Economic Growth

April 19, 2016

Strong consumer fundamentals—growing employment, rising real wages, and increasing remittances and credit—will continue to support private consumption and, in turn, overall economic growth this year. However, persistently low oil prices, public expenditure cuts and sluggish growth in the U.S. manufacturing sector will limit more meaningful growth. Analysts expect GDP to increase 2.4% in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, the economy is seen accelerating to a 2.8% expansion.

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