Higher inflation and lower growth during 2022 and 2023: Banxico survey

Inflation expectations for this year and next remain under pressure and above the specific target of the Bank of Mexico, which is 3%, despite the fact that the market expects moderation in economic growth.

According to the first survey of the year conducted by the Bank of Mexico (Banxico), private sector specialists predict that inflation will end 2022 with a variation of 4.42 percent.

This forecast includes a sixth monthly upward revision from the 3.70% they had in July and shows that Mexico will experience a second consecutive year with inflation outside the allowable range of +/- 1 percentage point above the 3% point.

For the Underlying inflation or structural, which is the measurement that includes only goods and services whose prices are not subject to any type of seasonal volatility, they predict that it will average 4.31% at the end of this year.

This projection includes 14 upward adjustments and according to experts from the International Monetary Fund (IMF) suggests that headline price pressures may be much more widespread as the year progresses.

According to the results of the survey, the experts also had their projection for the National Consumer Price Index (INPC) for next year to leave it at 3.73%, a fluctuation which, although more moderate than the one projected for 2022, also includes a sixth upward correction since July, when it was at 3.55 percent.

For the Mexican economy, specialists expect growth of 2.27% this year, showing a first downward revision of the 2.79% adopted in November and December and is the lowest rate collected by the survey in at least 12 months.

The new average GDP forecast held by private sector specialists is below the IMF’s revised expectations of 2.8%; and far from the government’s estimate on which they based the Federal Executive Budget, of 4.1 percent.

If we look at 2023, specialists expect the economy to record a 2.14% advance, a more moderate dynamic than the 2.22% forecast in November and that it will be the lowest expectation collected since January 2021 .