Bank of Mexico Cuts 2023 Growth Forecast to 0.6%

The Bank of Mexico has significantly reduced its growth forecast for the nation's economy in 2023 to just 0.6%, down from 1.2%, amid increasing uncertainties both domestically and externally, particularly due to U.S. policies under the Trump administration. The bank also anticipates inflation will take longer to reach its 3% target, with headline inflation projected at 3.3% for the fourth quarter. Despite these challenges, Banxico sees potential for further cuts to its benchmark interest rate following a recent 50 basis point reduction, as inflationary pressures appear to be easing. Analysts note that if trade terms with the U.S. stabilize, there might be some upside for the Mexican economy. However, the outlook remains cautious, with a potential recession looming if the economic situation does not improve. The revised forecasts highlight the balance of risks leaning towards inflation remaining elevated in the near term.