Bank of Mexico Revises Economic Growth Projections Amid Persistent Inflation

The Bank of Mexico has adjusted its growth forecasts for the next two years, citing weakened foreign manufacturing demand and persistent inflation. The central bank now expects lower GDP growth in 2024 and 2025 and has raised its inflation forecasts, while signaling potential future interest rate cuts.

The Bank of Mexico has revised its growth projections for this year and the next, as stated in its recent quarterly report. The central bank cited softer foreign manufacturing demand and stubborn inflation as reasons for the adjustment.

Now, Banxico expects a GDP growth of 1.5% in 2024, down from the previous estimate of 2.4%, and has also lowered its 2025 forecast to 1.2% from 1.5%. Weaker-than-anticipated second-quarter growth and subdued external demand have been noted as significant factors.

Despite these challenges, the central bank maintains optimism for future growth, citing a potential recovery in U.S. manufacturing. However, inflation remains a concern, with the core inflation forecast adjusted to 3.9% by the end of this year. This cautious outlook follows a recent interest rate cut, as the bank aims to stabilize the economic landscape while keeping an eye on inflationary trends.

(With inputs from agencies.)