Mexico’s economy will grow 2.9% in 2023 while the Mexican peso will trade at just under 18 to the US dollar at the end of the year, according to consensus forecasts of analysts surveyed by Citibanamex.

The bank surveyed analysts from 32 banks, brokerages and other financial institutions and published the results on Tuesday.

The consensus forecast for GDP growth this year is 0.2 percentage points higher than that published by Citibanamex two weeks ago. The predictions of the analysts surveyed ranged from 2.3% to 3.5%.

Even the most optimistic forecasts, which came from analysts at French bank BNP Paribas and Mexican brokerage Finamex, are below the 3.6% annual growth recorded in the first half of the year, according to preliminary data published by national statistics agency INEGI on July 31.

The private sector analysts’ consensus forecast for 2023 growth in Mexico is above the International Monetary Fund’s current prediction of a 2.6% expansion, but below the federal government’s prognosis of an advancement of at least 3%. The government believes that the relocation of foreign companies to Mexico as part of the growing nearshoring phenomenon will spur growth of 3% or more this year.

In 2024, the analysts surveyed by Citibanamex anticipated, on average, growth of 1.6%, up from a 1.5% consensus forecast found by the previous four surveys.

As for the Mexican peso, the consensus forecast was that it will trade at 17.85 to the US dollar at the end of the year. That’s a slight improvement for the peso compared to the previous 17.88 prediction, but a significant weakening compared to Wednesday morning’s USD:MXN exchange rate of about 16.8.

Analysts believe that the peso will depreciate next year to end 2024 at 19 to the greenback.

With regard to Bank of Mexico (Banxico) monetary policy, Citibanamex found that the consensus view is that an initial 25-basis-point cut to the current record high interest rate of 11.25% will come in December. The central bank raised its key rate to that level in March and kept it there following monetary policy meetings in May, June and earlier this month.

Banxico said in a statement Aug. 10 that “the inflationary outlook is still very complex” and that “in order to achieve an orderly and sustained convergence of headline inflation to the 3% target, [the bank’s board] considers that it will be necessary to maintain the reference rate at its current level for an extended period.”

The analysts surveyed by Citibanamex predicted, on average, that annual headline inflation will be 4.67% at the end of the year. That consensus forecast is just 0.12 percentage points below the 4.79% rate recorded in July.

With reports from EFE