Mexico’s real GDP likely to grow 2.4 pct in 2016 and higher in 2017

The Mexican economy continues to be strongly influenced by the USA’s business cycle. The domestic-led economic growth of the US continues to be quite supportive of its NAFTA zone partners. Consumer strength of Mexico and the rebounded labor markets of the nation are contributing to a gradual growth of the Mexican economy despite key growth deterrents in place, such as weakening export and manufacturing activity and significant public sector investment cuts, stated Scotiabank in a research report.

“Real GDP is positioned to expand at a modestly higher rate in 2017 following an estimated rate of 2.4 percent in 2016”, added Scotiabank.

Mexico continues to be a strong destination for direct inflows from foreign multinational manufacturing companies that eye the US market. Meanwhile, the Mexican central bank has carried out pre-emptive monetary tightening in response to price pressures that might unfold in months to come. The severe decline in crude oil prices, along with the one-off impact of lowered telecommunication costs contained the core inflation in the past 18 months.

Nonetheless, the absence of such disinflationary drivers as the government adjusts administered fuel and electricity prices might lead to possible, but manageable, inflationary pressures, according to Scotiabank. Containment of inflation, so far, has been quite a success for the Mexican central bank.