Insecurity, the biggest obstacle to achieving GDP growth of 1.68% this year: Banxico Survey

Private sector specialists continue to improve their expectations for Mexico. Now they expect a growth of Gross domestic product (GDP) of 1.68%, which is the highest projection obtained by the survey of Bank of Mexico 10 months.

When the advisers of large investors focus on Mexico, they identify three factors that could hinder the growth of economic activity: It is about public insecurity; the problems of lack of rule of law and inflationary pressures in the country.

According to the results of said survey, 23% of the 37 specialists consulted identified public insecurity problems as the greatest obstacle to growth. This is the highest proportion of experts who have this perception in the surveys collected in the last 11 months.

Then, with 10% of the mentions, the problems of lack of rule of law as well as inflationary pressures in the country were tied as the second most mentioned obstacle.

Regarding the inflation expectations collected by the survey, a new monthly downward revision is observed for both this year and the next. However, in both cases, they remain below the specific objective, which is 3 percent.

The longer-term outlook for inflation also shows improvement. The same survey shows that inflation expectations for the next 12 months have moderated on a consecutive monthly basis since November of last year.

At that time, specialists expected inflation for the following November to be at 5.01 percent.

This forecast presented its first downward adjustment since the 5.33% estimated in October, also for a 12-month period.

At this time, the specialists consulted by Banxico anticipate a variation of 4.67% in inflation from May 2023 to the same month of 2024.

cloudy investment climate

In the section of the survey on the perception of the business climate offered by Mexico, only 6% of analysts consider this as a good time to make investments. A lower proportion than those who had this sentiment the previous month, which was 11 percent.

According to the results, 40% of those consulted responded that it is a bad time to invest, a proportion that exceeds the 37% who had this same perception the previous month.

In the May survey, only 9% believe the business climate will improve in the next six months, 43% believe it will stay the same and 49% say it will worsen.