Bank of America Securities (BofA Securities) anticipates that the mexican economy it will register a growth of 1.5% this year, a rate that is far from the 2.5% estimated by them still at the end of last year.
“The data on economic activity in the last quarter of the year have been disappointing and cannot be overlooked in the context of a contraction that had already been coming since July,” observed the chief economist for Mexico and Canada. Carlos Capistran.
In an online conference, to present his economic perspectives, he specified that this low growth occurs despite the strong boost that the performance of the United States has given via trade and remittances.
“We believe that a combination of conservative public policies, high uncertainty due to constant changes in investment rules, low growth expectations and the effect of Covid-19 on economic activity are behind the low growth dynamics,” he said.
According to the strategist, investors are discouraged from having certainty about the rules to operate in the country. If the regulatory changes that have characterized the transformation that the current government is leading persist, they will continue to perceive no conditions to plan investments and trigger growth.
The strategist estimated that before the inflationary pressure and the increases in the rate that will drive the Federal Reserve this year, the Bank of Mexico It could drive 4 more hikes in the rate, two of 50 points each in the February and March meetings, and two more than a quarter of a point in the second semester. If correct, the funding rate would average 7% at the end of the year.
However, he clarified that he still needs to meet the new governor Victoria Rodriguez Ceja, your concerns, and the tone of your vote, which could change your rate forecast.
This context of rate hikes does not favor an increase in private investment either, he added.
And more divestment is coming
The global context will also continue to be reflected in Mexico. In the financial context, it warns that in BofA They expect four rate hikes in the United States, which will motivate bond liquidations in emerging markets.
So the divestment of Mexican securities could continue in 2022 as well, he acknowledged.
He acknowledged that in 2020 and 2021 there were capital outflows from all emerging countries, but it seems that Mexico was particularly impacted by this liquidation, probably due to domestic factors.
Capistrán clarified that it could be that investors anticipated the rise of the Fed and the adjustment of portfolios, and that the liquidation of Mexican bonds is nuanced.
Reference-www.eleconomista.com.mx