Outlook for the Mexican Economy | Insights from Deloitte

Mexico, the twelfth-largest economy in the world by nominal GDP, is facing a crucial test with its upcoming presidential elections on June 2, 2024. The current ruling party, Morena, is predicted to retain power by Oraculus, a leading poll aggregator. However, this may come with challenges in controlling the country’s policy as regional governments and congressional seats could shift to the opposition. This political tug of war may lead to hesitancy in making changes and limited opportunities and risks.

In terms of economic indicators, Mexico appears to be in a state of equilibrium. Inflation has decreased volatility since April 2023, particularly with core inflation. Deloitte predicts that Mexico will end the year with an annual inflation rate of 4.3%, close to the current 4.7%, and likely to remain within the range of 4% to 5% for the next few years. As a result, the Bank of Mexico may not be able to significantly relax its monetary policy, with the benchmark interest rate expected to decrease from 11% to 9.75% in 2024 and 7% in 2025. Even with this decrease, Mexico’s interest rates will remain among the highest in Latin America, supporting the strong performance of the Mexican peso. The peso is expected to reach 17.60 pesos per dollar by the end of 2024 and 19.20 pesos per dollar in

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