Despite the efforts of the federal government to control the rise in prices in the country, inflation will remain high in the coming months and will end the year at a level of five percent, according to the Ministry of Finance and Public Credit (SHCP).
When announcing the General Precriteria for Economic Policy 2024, the SHCP highlighted that in the remainder of the year, the slowdown in inflation is expected to continue towards the target range of the Bank of Mexico (Banxico), which goes from two to four percent, derived from “various positive elements.”
This new forecast is far from the 3.2 percent estimated by the agency in September of last year, when the 2023 Economic Package was presented.
“First, the lower international prices of raw materials such as energy and industrial inputs will continue. Second, the reestablishment of global value chains will allow greater availability of inputs, especially those that were affected in 2022 by the closure of China and the war in Europe ”, he pointed out. The third element, according to the SHCP, is that the more restrictive monetary policy in Mexico and the world will continue to have an impact on reducing demand pressures and will help control inflation levels.
The General Precriteria for Economic Policy 2024 is a document that contains the main economic variables, such as inflation or the Gross Domestic Product (GDP), and with which the federal government’s income and expenditure goal is estimated.
“The Treasury projections are in line with the consensus of analysts, who also expect inflation to continue to fall for the remainder of the year. However, important upward risks persist, such as an increase in food prices or that the war between Russia and Ukraine continues to cause global problems,” said Salvador Soto, an academic at the National Autonomous University of Mexico (UNAM).
In recent months, inflation in the country was affected by a rise in the cost of food products, mainly fruits and vegetables, and in recent weeks by higher prices in food services, such as restaurants, inns, taquerias, and cake shops, according to the Institute. National Statistics and Geography (Inegi).
Until the first half of March, general inflation in Mexico reached a level of 7.12 percent, the lowest since the second half of January 2022.
The SHCP expects that the six-year term of President Andrés Manuel López Obrador will end with a punctual growth of three percent, a figure higher than the 2.4 percent presented in the 2023 Economic Package.
According to the agency, the expansion of GDP will be a consequence of the policies implemented by the government, as well as an improvement in the country’s internal demand.
“The Mexican economy will continue to grow thanks to the new economic policy implemented by this administration, which has strengthened the domestic market, boosting public investment and creating favorable conditions to take advantage of the opportunities derived from the relocation of companies in the country,” detailed the SHCP.
The new growth forecast is far from the estimate of the Chief Executive himself, who in February 2022 estimated that that year and the next two the country would grow at a rate of five percent.
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In addition to growth of three percent, Rogelio Ramírez de la O’s office expects an exchange rate of 19.30 pesos per dollar, while the reference rate will reach 8.50 percent.
Regarding the Mexican Export Mix (MME), the SHCP projected a price of 56.3 dollars per barrel, as well as a production platform of 1.91 million barrels per day.