Specialists see price pressure for longer

The Survey on the expectations of specialists in the private sector economy carried out by the Bank of Mexico (Banxico) in November, showed that they increased their general inflation forecast for 2021 from 6.60% to 7.20% and for 2022 they raised it from 3.93 to 4.12 percent.

For its part, the estimate for core inflation went from 5.30% in October to 5.49% in November for all of 2021; while for the next year the average rose from 3.80 to 3.89 percent.

“Expectations for headline and core inflation for the end of 2021 and 2022 increased compared to the October survey.”

Less growth

Regarding the forecast for the Gross Domestic Product (GDP), the economics specialists of the private sector moved it lower, going from 6.00% in October to 5.65 percent. By 2022, they reduced it from 2.90 to 2.79 percent.

According to analysts, the main factors that could hinder Mexico’s growth are: those related to governance with 45%, internal economic conditions with 23%; inflation with 15%; public finances 8%; external conditions 8%, and monetary policy with just 2 percent.

Dollar and rate, on the rise

Regarding the exchange rate, they raised their expectations from 20.38 to 20.89 pesos per dollar for 2021 and from 21.04 to 21.32 for 2022; while that of the funding rate went from 5.24 to 5.27% for this year, and from 5.84 to 6.08% for the next.

For Monex, expectations have changed a lot in the face of uncertainty. “The inflation estimate for the end of the year is already above 7.0% and the indicator is shaping up to register its highest level since Banxico established the objectives regime,” he detailed in an analysis.

He added that what is most worrisome is the continuous deterioration of expectations for broader time horizons and considered that the November survey reflects that expectations are subject to high uncertainty and that the economic outlook, far from stabilizing, continues to be prone to the appearance of shocks that affect the outlook substantially.

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