Bank of America reduces Mexico's growth projection to 0% for 2023;  expect economy to stagnate

Economists from Bank of America (BofA) said they expect a slowdown in Mexico’s economy in 2023 in line with the slowdown in its neighbor and main trading partner, the United States.

BofA lowered its growth forecast for Gross domestic product Mexican (GDP) for 2023 to 0.0%, from 1.0% previously, while expecting an expansion of 1.9% in 2022.

According to a report by the firm, Mexico’s GDP will be affected by external factors, particularly interest rate hikes in the United States, while at the domestic level the higher financing and energy costs, and a still somewhat restrictive fiscal policy, will add pressure to the economy, which is already facing uncertainty due to the difficulties of the North American Trade AgreementTMEC.

Concern about the USMCA increased in July when the United States and Canada requested consultations on what they claim are energy breaches of the Latin American nation, which they consider discriminatory and detrimental to their companies.

For its part, the Mexican government has expressed that it hopes to reach a mutually satisfactory solution for all parties and maintains that the country has not committed any violation of the TMEC.

The Economy of mexico grew between April and June for the third consecutive quarter and increased 1% quarterly, despite the contraction in the United States, but both the rating agency Fitch and BofA see risks in that the growing probability of a recession in the neighboring country affects over time the local economy.

On a positive note, BofA economists keep expectations unchanged for the nation’s central bank, Banxico, with a terminal rate of 9.5% in 2022 and no cuts in 2023.

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