MexECON Blog

Central Bank Raises 2010 GDP Forecast

Speaking at a conference, Banco de Mexico Governor Agustin Carstens said he now expects Mexican gross domestic product (GDP) to grow between 4.0% and 5.0% in 2010.  That would mark a sharp reversal from the 6.5% decline in 2009, and it would be significantly better than Mexico's compound average growth rate of 2.6% in 1989-2009.  In January, Carstens had said that he expected Mexican GDP to grow just 3.2% to 4.2% in 2010.

Comment:  The central bank chief's new forecast is more in line with expectations at the ministry of finance and among private forecasters.  Mexico's economy began to recover in the second quarter of 2009, driven by rapidly recovering exports, improving consumption demand, and rising inventory investment.  The risk is that inventory rebuilding in the United States could peter our before U.S. consumption demand starts to strengthen.  In that case, Mexico's exports could stall out and slow the overall economy again.

Patrick Fearon, CFA
Vice President, Fund Management

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