Boston, MA -- (SBWIRE) -- 02/18/2014 -- We remain optimistic about Mexico's long-term growth outlook on the back of a booming manufacturing sector, an increasingly strong private consumer and favourable demographics.
The passage of energy sector reform will bolster sentiment towards Mexican assets and contribute to stronger real GDP growth in the coming years.
Major Forecast Changes
We have upgraded our 10-year average real GDP growth from 3.8% to 4.1% following the passage of energy sector reform, which we expect will garner significant foreign investment in the coming years.
We have revised our 2014 average exchange rate forecast from MXN12.65/US$ to MXN12.55/US$, as the peso was stronger than initially expected in 2013, when it averaged MXN12.76/US$.
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We have revised our 2014 current account deficit forecast from 1.0% of GDP to 0.7% of GDP, owing to a strong export outlook, particularly regarding the manufacturing sector.
We have revised our 2014 fiscal deficit forecast from 2.6% of GDP to 3.1% of GDP following the announcement of additional government spending this year.
Key Risks To Outlook
A further deterioration in the construction sector poses significant downside risk to our 2014 real GDP growth forecast. We expect the sector to recover after it contracted for several consecutive quarters since late 2012. However, homebuilders remain in a critical state financially, which could lead to an additional deterioration of the sector.
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