Banxico's Growth Forecast Cut: Battling Inflation Amid Economic Struggles

Mexico's central bank, Banxico, has reduced the country's growth forecast to nearly zero due to economic weakness. Maintaining low growth predictions for the next year, the bank remains optimistic about meeting inflation goals. Recent rate cuts aim to control inflation, which stands at 3.61% as of November.

The Bank of Mexico, also known as Banxico, issued a warning of economic slowdown as it slashed its growth forecast to almost zero. This decision comes amid expectations that a lagging economy could curb persistent inflation.

Adjusted projections now show Mexico's GDP growing by just 0.3% this year, a sharp decline from the previous 0.6% forecast. For 2024, growth is anticipated to remain modest at 1.1%. Additionally, inflation estimates for late 2025 and early 2026 have been slightly increased in their latest report.

Despite these challenges, Banxico remains confident in achieving its 3% inflation target by the third quarter of 2026. A recent benchmark rate cut, down to 7.25%, reflects efforts to balance financial stability amid weak economic activity.

(With inputs from agencies.)