MexECON Blog

Government Raises Official Growth Forecast

At a press conference earlier this week, Economy and Finance Minister Ernesto Cordero said his ministry now expects Mexican gross domestic product (GDP) to grow between 4.5% and 4.8% in 2010.  According to Cordero, recent economic reports have shown that Mexico is recovering "actively" from the global recession.  However, he made no mention of the ministry's forecast for 2011.

Comment:  In mid-June, Cordero speculated in an interview that Mexican GDP growth this year could range anywhere from 4.5% to "slightly more than" 5.0%, but his statement this week was the first indication that his ministry has raised its official forecast.  The ministry's new forecast is actually on the conservative side.  Earlier this month, the International Monetary Fund raised its forecast for Mexico's 2010 economic growth to 5.0%, and actual growth in the first two quarters of the year averaged approximately 6.0%.  Nevertheless, most observers expect Mexican growth will slow significantly in 2011, largely in response to slowing U.S. growth.  Several recent forecasts have called for Mexico's growth in 2011 to fall to between 3.5% and 4.0%.  Such figures would still be well above Mexico's average annual growth rate of 2.6% from 1989 to 2009, but they would suggest that the strongest part of Mexico's current economic rebound may be coming to an end.

Patrick Fearon, CFA
Vice President, Fund Management

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