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Mexico Business Forecast Report Q1 2014 - New Market Research Report

New Country Reports research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 11/28/2013 -- We remain optimistic toward Mexico's long-term growth outlook on the back of a booming manufacturing sector, an increasingly strong private consumer and favourable demographics, though have increased our near-term caution due to a weak performance by the manufacturing sector.

We expect energy sector reform to be approved over the coming months, though its ability to garner substantial foreign investment will be highly dependent on the terms set by its associated secondary legislation.

Major Forecast Changes

We have revised our real GDP growth forecast from 3.0% to 2.3% in 2013, and from 3.9% to 3.5% in 2014, as the manufacturing sector is struggling to gain traction, and the impact of delays in public spending have been greater than we initially expected.

We have revised our monetary policy outlook from 3.75% to 3.50% for end-2013, as the Banco de Mexico concludes its easing cycle, and we expect a hiking cycle to begin in late 2014, when forecast the policy rate to end at 3.75%.

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We have revised our 2013 average peso exchange rate forecast from MXN12.70/US$ to MXN12.85/US$, as deteriorating sentiment and the impending normalisation of US monetary policy will result in a weaker unit. We have also made adjustment to our 2014 average exchange rate forecast to MXN12.65/US$ from 12.50 previously, though we still expect a stronger peso next year due to an improvement in trade and investment dynamics.

Key Risks To Outlook

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