PUERTO VALLARTA (PVDN) – The World Bank has adjusted its growth forecast for the Mexican economy in a positive direction for the second time this year, now predicting a 2.5 percent growth rate for 2023. This revision comes after initial projections in January estimated a 0.9 percent growth, which was later upgraded to 1.5 percent in April.
Fiscal Policy and Stronger Investment and Consumption Fuel Growth
In its ‘World Economic Perspectives’ report, the World Bank indicated that fiscal policy is unlikely to drive growth in Mexico this year. Instead, growth is expected to be supported by the completion of key public projects and social programs, and by investment and consumption rates that have exceeded expectations.
Mexico’s growth rate, although expected to slow slightly against a backdrop of tightening monetary policy, remains robust. “Since inflation has come down from its peak last year, the central bank has stopped monetary contraction,” the report stated.
Looking ahead, the World Bank projects a growth rate of 1.9 percent for 2024 as monetary policy is eased, maintaining a rate of two percent into 2025.
Latin America and Caribbean Economies Showing Signs of Improvement
For the broader region of Latin America and the Caribbean, the first quarter of this year saw weak but improving growth in private sector activity, although consumer confidence has been mixed across different countries.
“Social unrest and political uncertainty have impacted consumer and investor confidence in several Latin American countries, and policy adjustments are under discussion across the region,” the World Bank stated. Consequently, it anticipates the regional economy to slow further to 1.5 percent in 2023.
Global Economic Slowdown Amid Rising Risks
On a global scale, economic growth has been sluggish, and the risk of financial tensions in emerging markets and developing economies has increased in an environment of high interest rates.
Consequently, the World Bank predicts a slowdown in the global economy to 2.1 percent in 2023, down from 3.1 percent in 2022.
“The world economy is in a precarious situation. Except in East and South Asia, we are a long way from achieving the dynamism needed to end poverty, counter climate change, and replenish human capital,” warned Indermit Gill, Chief Economist and Senior Vice President of the World Bank Group.
According to the report, growth in advanced economies is expected to slow from 2.6 percent in 2022 to 0.7 percent in 2023, and remain weak in 2024. The US economy, specifically, is anticipated to decelerate to 0.8 percent next year, largely due to the long-lasting impact of substantial interest rate increases over the past eighteen months.
For the eurozone, forecasts suggest that growth will taper from 3.5 percent in 2022 to 0.4 percent in 2023, mainly attributed to the protracted effects of monetary policy tightening and soaring energy prices.
PUERTO VALLARTA (PVDN) - The World Bank has adjusted its growth forecast for the Mexican economy in a positive direction for the second time this . . .
