Mexican economy likely to accelerate by 2.8 percent in 2016

The Mexican economy is seen accelerating moderately on improving private consumption and low inflation. Private sector investments are strengthening at a moderate pace; however, construction and other selected sectors are negatively affected by the sharp decline in oil prices.

Over the past few months, Consumer Price Inflation has been decreasing to a rate as low as 2.1 percent Y/Y. Upbeat labour market environment and persistently low crude oil prices are keeping the disinflation dynamics at a low level.  The central bank is confident about the headline inflation rate to stay slightly above the 3 percent target during this year.

"We project the Mexican economy to expand by 2.8% this year, and accelerate to 3.5% in 2017, following an estimated 2.5% growth rate in 2015. The central bank believes that the risks to growth are tilted to the upside in the year ahead", says Scotiabank in research note.