Market forecasts that inflation will reach 8.2% and Mexico’s GDP will remain at 1.9% this year: FocusEconomics

The inflation In Mexico, this 2022 will register a variation of 8.2% in an economic environment of deceleration, where the Gross Domestic Product (GDP) will show an advance of 1.9%, according to the expectations gathered by FocusEconomics among 48 brokerages and financial strategists.

If these forecasts are correct, 2022 will be a second consecutive year with inflation outside the target and above the limit allowed by Bank of Mexico (Banxico) of 4 percent.

The average expectation of inflation that the market brings also incorporates twelve consecutive monthly corrections to the rise and is above last month’s estimate, which was 8 percent.

Among the expectations collected, the experts who have the highest inflation forecasts for Mexico in 2022 are those of Finamex Casa de Bolsa, who anticipate a fluctuation of 9.1%; and very close to them, 16 panelists expect the annual variation of the National Consumer Price Index (INPC) will be between 8.5% and 8.9% at the end of the year.

According to the information detailed in the consultancy’s monthly report, there is not a single analyst who considers it possible to reach even the upper range of the inflation target (3+/-1%) this year. The lowest inflation expectation compiled by FocusEconomics CABI has it as well as JP Morgan, estimated at 7 percent.

GDP below 2%

Regarding the consensus of expectations for this year’s GDP, the information contained in the monthly report of LatinFocus Consensus Forecast of FocusEconomics identifies a third consecutive monthly moderation of the spending components.

They consider that the weakening of private consumption, fixed investment and exports has been the origin of this more pronounced slowdown.

This environment will cause the economy to register a growth of 1.9% in the year, a forecast that has remained unchanged since July.

Despite the stability of the GDP expectation, the rate is half a point below the 2.4% projected by the government in its Federal Budget Project for 2023, it is below the 2.1% forecast by the International Monetary Fund (FMI) and is far from the 2.8% estimated in January.

In the detail of the information it is observed that the two financial groups that have the highest growth forecast are Barclays Capital as well as UBS, which place at 2.3 percent and in contrast CABI anticipates that the GDP will be located at 1.6% which is the lowest rate expected by the experts consulted.

These are the latest forecasts that the firm will collect for the year 2022 since from November it begins to collect forecasts for 2023 and 2024.

2023 also with inflation

The inflation picture is not very different for next year and in fact it is similar for all the countries of Latin America.

The experts consulted by the firm consider that the weakening of currencies due to global volatility; High energy and food prices, as well as unanchored expectations in several countries in the region, will limit inflationary moderation.

In fact, they anticipate that the two largest economies in the region, which are Brazil and Mexico, will observe variations in inflation of 4.9% and 4.7%, respectively.

Both records will be above the goal of the central banks, which is 3% with +-1% for the Mexican case and the 3.75% that the central bank of Brazil has.

They pointed out that neither the monetary politics more aggressive that the central banks will apply, nor will the slowdown facilitate a greater moderation in the regional escalation of prices.

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