Mexican economic activity will reach a growth rate of slightly more than 3%, underpinned by domestic consumption and considering the possibility that the United States achieves a soft landing with its restrictive policy, said Carlos Serrano, chief economist at BBVA Mexico.
“BBVA’s current GDP forecast for Mexico is 2.4%, but it will be corrected upwards assuming the latest data on economic activity in the second quarter and withdrawing the expectation of recession that they had for the United States,” Serrano warned.
“BBVA carries out quarterly revisions on its forecasts, and the GDP is scheduled for September. Everything indicates that the economy will achieve growth of more than 3%,” Serrano told “El Economista.”
With this upward correction, BBVA becomes the fourth operating bank in the world to expect economic growth of more than 3% for Mexico, along with Barclays (3.2%), BNP Paribas (3.5%), and Bank of America Securities (3.2%).
Serrano stressed that the internal engine of growth is still on in consumption, driven by the strength of real wages that have grown above inflation as well as by job creation.
In fact, he clarified that economic growth would be much higher with a less restrictive monetary policy.
Inflation
Regarding inflation, it estimates that it will end this year with a variation of 4.5 to 4.6% per year, with a clear downward trajectory that reflects the effect of restrictive policy.
“The Bank of Mexico will assume this downward trend that inflation is presenting to adjust the monetary restriction and leave the rate at 11% at the end of the year or early next year. This implies the forecast of a quarter-point cut that can be completed in November or December,” Serrano said.
“The real rates are very high, around 7%; it is one of the highest among peers that have the same investment grade and will begin to affect the demand for business credit,” he added.
