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LatinNews Daily - 16 June 2021

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In brief: Fitch raises growth forecast for Mexico

* International credit ratings agency, Fitch Ratings, has raised its 2021 GDP growth forecast for Mexico from 5% to 5.3%. This increase follows Mexico’s 0.8% quarterly GDP growth in the first quarter of 2021, more than double the forecasted rate of 0.3%. Fitch cites as reasons for its revision, falling coronavirus (Covid-19) infections and concomitant progression in vaccination rates, allowing various sectors of the economy to reopen and boosting consumption. Similarly, investment is progressively recovering, growing 2.3% month-on-month in March, which is expected to positively impact GDP. On the flip side, economic recovery has also positively influenced imports, with Fitch expecting that this will generate an expected negative net trade contribution to GDP. On the political front, Fitch notes that the result of the 6 June midterm elections reduced the majority of the ruling left-wing Movimiento Regeneración Nacional (Morena) party in the fedral congress, which “may make it more difficult for the administration to enact some controversial reforms” and was therefore positively greeted by the financial markets.