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Mexico Business Forecast Report Q4 2012

740.8

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Electronic License

Electronic License

An electronic version (mostly PDF, but can be Excel or PPT), which is either available for immediate download or will be sent via email by the Publisher of the report. The licencing for an electronic version is for use by the purchaser ONLY.

£740.80

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Market

All Sectors

Report Type

Country Guide

Country

Mexico

Published

24 October 2012

Number of Pages

49

Report Delivery

Download

Delivery Lead Time

Immediate

Publisher

Business Monitor International

File Format

PDF

We have turned cautiously optimistic regarding Mexicos growth outlook, raising our average real GDP growth forecast for 2012-2021 from 2.7% to 3.3%. This view is underpinned by our expectation for robust credit growth, which is likely to bolster consumer spending, and the increasing likelihood for greater energy sector reform under the next president. We believe Mexicos central bank retains an underlying fundamentally dovish bias, underpinned recently by concerns about growth in the facing of rising external headwinds as well as the stability of the countrys external account position. However, with the passthrough impact of a weaker peso as well as high corn and poultry prices boosting inflation, we believe the bank may be forced to delay easing until 2013. Cartel activity will continue to weigh on growth for the foreseeable future, though we believe the situation is unlikely to deteriorate further.

Major Forecast Changes

After a strong Q112 and the election of business-friendly presidentelect Enrique Peña Nieto (who will assume office on December 1), which will likely drive stronger investment inflows, we are revising up our real GDP growth forecast from 3.4% to 3.8% in 2012. Investment will continue to rise in 2013. However, we believe growth will slow as a weaker external environment begins to weigh on Mexican consumer confidence.

We are forecasting growth of 3.4% in 2013. We have pushed back our call for a policy rate cut on the back of higher than anticipated inflation. We are forecasting the policy rate at 4.50% (from 4.00%) as of end-2012. We see potential for economic and security-related reforms in the wake of Mexicos July 1 presidential and legislative elections. However, we note that these changes may be less rapid than initially anticipated given that the Partido Revolucionario Institucional failed to win a majority in parlia ment.

Key Risks To Outlook

Inflation came in above the Banco de Méxicos 2%-4% target band in June, mostly on the back of supply-side pressures including rising corn prices and the impact of the bird flu outbreak. If inflation remains above the banks target band, we could see rising pressure on the monetary authorities to hike the policy rate.

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+44 (0) 203 086 8600

Select License Type

Electronic License

Electronic License

An electronic version (mostly PDF, but can be Excel or PPT), which is either available for immediate download or will be sent via email by the Publisher of the report. The licencing for an electronic version is for use by the purchaser ONLY.

£740.80

Change Currency

GBP EURO USD

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USD

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