According to Reuters’ Friday copy of the government’s latest budget forecasts, increased industrial investment and lower inflation may boost Mexico’s GDP to 3.0% this year and next.
The document stated the ministry expects Latin America’s second-largest economy to grow between 2.2% and 3.0% this year and between 1.6% and 3.0% in 2024 as the country recovers from epidemic losses.
In 2023, the “lower end of the range was adjusted upwardly due to the robust development of the domestic economy,” according to early predictions.
By 2024, Mexico’s inflation rate will drop to 4.0% from 5.0%.
Central banks hurried to raise interest rates to halt global inflation. Mexico’s central bank lifted rates 25 basis points to 11.25% Thursday but signaled the rising cycle might end.
The ministry claimed foreign rate hikes hadn’t hurt Mexico’s budget.
The ministry expects “modest and varied” debt when President Andres Manuel Lopez Obrador’s tenure ends next year, with 80.6% issued in Mexican pesos.
As Pemex exports are a major government tax income source, the ministry predicted that Mexico’s crude oil export mix would average $66.60 per barrel this year and $56.30 next year.
The ministry forecasted 1.877 million barrels per day (bpd) of petroleum output this year, largely from Pemex, and 1.914 million in 2024.
The finance ministry expects the López Obrador-backed Tabasco Dos Bocas refinery to reach full capacity next year.
The government also expects “nearshoring” to boost private investment in Mexico.
The government estimated nearshoring might boost GDP by 1.2 percentage points over time.
The government expected foreign investment in manufacturing to rise, and the car industry was a “perfect candidate” for nearshoring.
Tesla (TSLA.O) recently announced it would build a “gigafactory” in Nuevo Leon, a northern border state, which local authorities say could attract $10 billion in investment and 10,000 jobs.
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