Bank of Mexico Cuts Economic Growth Forecast Amid Stubborn Inflation - What Does This Mean For Your Finances?
In a recent quarterly report, the Bank of Mexico has revised its economic growth forecast for this year and next, citing stubborn inflation and weak external demand. The central bank now expects GDP growth of 1.5% in 2024, down from a previous forecast of 2.4%, and growth of 1.2% in 2025, down from 1.5%.
This adjustment comes as the second-quarter growth fell significantly below expectations, and with expected weakness in the U.S. manufacturing sector impacting external demand. The central bank also raised its inflation forecasts for this year, with core inflation expected to reach 3.9% in the fourth quarter and headline inflation projected to hit 4.4% by the end of the year.
The report highlights rising prices for produce and energy, as well as persistent services inflation, which is not showing signs of easing. Despite these challenges, the Bank of Mexico anticipates that the inflationary environment could pave the way for further cuts to the benchmark interest rate.
For investors and individuals, this forecast can have a significant impact on their finances. With lower economic growth and higher inflation, it may be wise to reassess investment strategies and financial plans. Keeping an eye on inflation trends and central bank decisions can help navigate these uncertain times and make informed decisions to safeguard financial stability.