Puerto Vallarta (PVDN) – According to Mexico’s government’s latest budget forecasts, the country’s economy is expected to grow up to 3.0% in both 2023 and 2024, mainly due to increased manufacturing investment and cooling inflation.
The document shows that the ministry predicts the economy to expand between 2.2% and 3.0% this year and between 1.6% and 3.0% in 2024, indicating that the country is making a strong recovery from pandemic-induced losses.
The ministry also mentioned that the lower end of the range for 2023 has been adjusted upwards due to the good performance of the domestic economy. The inflation rate in Mexico is expected to slow down to 5.0% by the end of 2023 and to 4.0% by the end of 2024, as global inflation rates have increased, and central banks have been increasing interest rates to control inflation.
The ministry also stated that Mexico’s public finances remain stable despite the international rate increases. The debt level is expected to be moderate and diversified, with approximately 80.6% denominated in Mexican pesos, by the time President Andres Manuel Lopez Obrador’s term concludes next year.
The finance ministry forecasted that Mexico’s crude oil export mix would average $66.60 per barrel this year and drop to $56.30 next year. The crude oil exports from state oil company Pemex account for a significant portion of the tax revenue for the government, making these estimates crucial for public finances. The ministry also estimated that the total crude output would be 1.877 million barrels per day (bpd) this year, primarily from Pemex operations, with an increase to 1.914 million bpd in 2024. The Dos Bocas refinery project, currently underway in the Gulf state of Tabasco, is expected to start operating at full capacity next year.
Mexico is also expected to benefit from private investment driven by nearshoring, which is the trend of relocating production to North America from Asia. The ministry anticipates nearshoring could add up to 1.2 percentage points to GDP, without specifying a time frame.
The automotive industry is expected to benefit from foreign investment in manufacturing due to nearshoring, with electric vehicle maker Tesla announcing plans to build a “gigafactory” in the northern border state of Nuevo Leon, which could bring in up to $10 billion in investment and create 10,000 jobs.
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