MexECON Blog

Update on GDP Forecasts for 2015

In late November, Banco de México announced that it now expects the country's gross domestic product (GDP) to grow just 2.0% to 2.5% in 2014, revised slightly from its previous forecast of 2.0% to 2.8%.  It still expects economic growth to improve in 2015, but only to 3.0% to 4.0%.  Previously, it had expected growth of 3.2% to 3.4% in 2015.

Meanwhile, the central bank said consumer price inflation in Mexico would be approximately 4.0% at the end of 2014, but would fall to its target of 3.0% in mid-2015.

Comment:  Banco de México's reduced growth forecast for 2015 is generally in line with the forecasts from other public and private analysts.  For example, the Ministry of Economy and Public Finance this fall cut its forecast for 2015 growth to 3.7%, and the International Monetary Fund has long been forecasting a growth rate of 3.5%.  For comparison, Mexican GDP has risen at an average annual rate of 2.5% over the last two decades.  The expected return to above-average growth in 2015 depends on continued growth in U.S. demand for Mexican exports, an ongoing recovery in Mexico's construction sector, and a stronger labor market that will support improved consumer spending.  The main risks are that falling oil prices and rising U.S. interest rates could spark an outflow of capital, while stubbornly high inflation could hold back consumption spending. 

Patrick Fearon, CFA
Vice President, Fund Management

Long Term GDP Growth 1990 to 2015

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