Mexico Economic Outlook. Second quarter 2022

Summary

Economic outlook with lower GDP growth, high inflation, and higher interest rates. A downward revision to our 2022 GDP growth estimate to 1.2% (2.1% previous) due to the continued weakness of domestic demand and the additional disruptions to global value chains driven by the Ukraine conflict.

Key points

• Key points:
• Negative private consumption expectations in an environment of higher prices and higher critical employment conditions.
• Formal employment shows strength at the beginning of the year, this allows us to maintain our perspective of employment creation. However, job insecurity is triggered by low-income jobs.
• With inflation far from the target, Banxico will continue to raise rates; it will keep a restrictive stance during 2022-24.
• Public debt will moderately increase in the medium term and will reach levels around 54% of GDP by 2026.

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