LatinNews Daily - 07 November 2022

In brief: IMF forecasts slowing economic growth for Mexico

* The International Monetary Fund (IMF) has forecast that Mexico’s economy will grow by 2.1% in 2022 and 1.2% in 2023. In a statement, the IMF said that, after stagnating in the second half of 2021, Mexico’s economic activity picked up in the first half of 2022, which the IMF attributed to “catch-up momentum, improving labour market conditions, and fiscal policy support.” However, the IMF warned that in 2023 “weaker US and global growth and tighter global financial conditions” would slow down economic activity, resulting in growth of only 1.2% in 2023. The IMF also forecast that inflation, which rose to 8.7% in August 2022, would “plateau in the second half of 2022 and then gradually decline”. The IMF’s executive board expressed support for Mexico’s “prudent macroeconomic policies in the face of a surge in inflation” and praised Mexico’s central bank (Banxico) for its “proactive approach to addressing the inflation surge”. Banxico raised interest rates to a record 9.25% in September and the IMF said it expected Banxico may need to maintain its restrictive policy stance “for some time”. In terms of areas for improvement, the IMF urged Mexican authorities to “address corruption and crime and strengthen the rule of law, increase human capital investment, tackle infrastructure bottlenecks, reduce labour and product market rigidities, and promote financial deepening and inclusion.”

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