By THÉRÈSE MARGOLIS
The Bank of Mexico (Banxico) lowered it predicted 2019 GDP growth rate for Mexico on Wednesday, Feb. 27, from between respectable 1.7 and 2.7 percent to an unexceptional 1.1 to 1.2 percent on Wednesday, Feb. 27.
Citing a variety of causes from a global economic slowdown to internal factors such as fuel shortages (due to a nationwide crackdown on gasoline theft) and railroad blockades by disgruntled teachers in the state of Michoacán earlier this year, Mexico’s Central Bank, in its Trimestral Report on the fourth quarter of 2018, lowered its expectations for economic growth for the third consecutive period.
Banxico also said that Mexico’s expected growth rate was negatively impacted by decreased oil production by the state-run Petróleos Mexicanos (Pemex) , dwindled investment and mounting labor conflicts in the maquiladora-heavy northern state of Tamaulipas, where in-bond factory workers have demanded higher wages, prompting many foreign corporations to pull out.
In its third quarter report, Banxico had forecast a 1.7 to 2.7 growth rate for 2019.
But in this latest report, the autonomous monetary authority had an equally dismal forecast for Mexico in 2020, where it dropped its anticipated growth rate from between 2 and 3 percent to between 1.7 and 2.7 percent.
Banxico Chairman Alejandro Díaz de León called the slowdown in investment “disconcerting” and warned that in order to attract more foreign capital, Mexico will have to make significant strides in improving security, transparency, accountability and the state of law.
Regarding inflation, the Banxico report predicted a 4.1 percent increase during the first trimester of 2019, with the expectation that that figure would drop to 3.4 percent by the end of the year and to the government’s targeted 3 percent in 2020.
As of a result of the lowered growth expectations, Banxico will probably cut interest rates in June.
Mexican President Andrés Manuel López Obrador, a left-leaning populist who took office on Dec. 1, had predicted a 4 percent growth rate for 2019.
On Friday, Feb. 28, the president refuted the Banxico report during his daily morning press conference, maintaining that the country will reach its 4 percent targeted growth this year.