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Citibanamex forecasts an economic slowdown for Mexico in 2023

Mexico City, Mexico — Mexico’s Citibanamex says the country will experience an economic slowdown next year with an annual growth of only 1.4 percent. Citibanamex analysts are predicting the slowdown due to the consequences of Covid-19, the Russia and Ukraine war and the breakdown of supply chains.

These, they report, are the three key factors that will see a difficult 2023 for the Mexican economy.

They also reported that the fiscal position of the current government will cause a deficit in the Financial Requirements of the Public Sector (RFSP) of 4.3 percent of the Gross Domestic Product (GDP), a figure higher than that estimated by the Ministry of Finance.

But not everything is in the negative. Citibanamex also expects inflation in Mexico to begin to decline. According to the bank, headline inflation peaked in August-September 2022 and core inflation in November-December.

“By 2023, we think that the pressures will gradually subside and we estimate that headline and core inflation will both stand at 4.8 percent,” Citibanamex reported.

Despite this, they say there are four factors that could imply persistent high inflationary pressures. The inertia of core prices, the impact of higher inflationary expectations on the part of economic agents, higher prices of raw materials and the potential effects of higher wages, which were announced by the government earlier in December.

The behavior of the US economy will also have a direct effect on Mexico. According to Citibanamex, “as the US economy deteriorates, so will the Mexican economy.” This is in addition to the pressures due to the anti-covid policies adopted by China and the decline of its economy.