Mexico Economic Outlook. December 2023

Summary

Upward revision to our 2023 real GDP growth estimate to 3.4% (3.2% previously); we anticipate a 2.9% growth rate for 2024 (2.6% previously). The GDP growth rate for next year would be below the corresponding figure of 2023 due to a lower external stimulus.

Key points

• Key points:
• Consumption remains resilient, driven by gains in real wages, employment and a lower savings rate of households.
• Investment shows a positive performance, favored by public investment and the rapid growth of the imported machinery and equipment component, which we ascribe to nearshoring expectations.
• Formal employment will continue strong during 2023 and our expectation for 2024 improves. The strength in the labor market will continue into next year supporting the real wage bill, though it will show some deceleration.
• We anticipate that public debt will increase to 48.6% by the end of 2024 vs. 46.4% of GDP in 2023 due to a higher public deficit.
• We continue expecting the start of a Banxico easing cycle in 1Q24, but now we anticipate a slower rhythm to reach a policy rate of 9.00% by the end of 2024.

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