Mexico: Will the economy decelerate? - Natixis

The analysis team at Natixis suggests that the Mexican economy is likely to decelerate from its current levels as growth should moderate amid higher inflation (5.9% in 2017) and tighter macro policies.

Key Quotes

“In short, we see lower consumption (2.2%) and higher net exports (0.6p.p.). Both variables have so far acted as important buffers but we expect them to lose impetus. After some consumption inertia, inflation should take its toll on purchasing power. Real wages should further contract at least until Q3 2017. Exports should peak in H1 narrowing considerably the trade deficit. Yet, the decline in US auto sales is a headwind to monitor closely.”

“We see a decline in investment (-0.5%). Credit to the private sector should cool down from its double digit growth as borrowing costs increase. A tighter monetary policy has come along with a strict control on public spending. This has been dragging down non-residential construction investment. Finally, Pemex has reduced its capex plans (10 Bns USD from 14 in 2015) to curb its funding needs. It will take time before the energy reform efforts materialize while oil output continues to fall.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.