Mexico Economic Outlook. Third quarter 2021

Summary

We upwardly revised the 2021 GDP growth forecast to 6.3% from 4.7%. Banxico will continue increasing the reference rate for the rest of the year unless inflation drops more-than-expected.

Key points

• Key points:
• More dynamism of consumption amid higher mobility and economic reopening. Investment recovery higher-than-expected in 1Q21, but still incomplete
• For 2022 we upwardly revised the GDP growth forecast to 3.0% from 2.8%, driven by an improved investment outlook
• Slow formal employment growth in the first half of the year. Nevertheless, we expect it to gain momentum in 2H21 on the economic reopening and higher expected GDP growth
• We expect Banxico to hike rates in the next three monetary policy meetings with above-5.0% headline inflation and above-4.0% core inflation for the rest of the year

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