Santander down to 1.8% economic growth forecast for Mexico in 2019

Santander down to 1.8% economic growth forecast for Mexico in 2019

Mexico City. The Santander Financial Group reported Monday that it lowered its forecast for Mexico's economic growth in 2019, which went from 2.3% earlier to 1.8%.

However, the financial institution maintained its estimate of growth of the Gross Domestic Product (GDP) by 2.1% for this year, according to a report to its clients.

The entity in Mexico of the Spanish bank also anticipated that the Central Bank of Mexico (Banxico) could raise its key interest rate before the end of the year, due to the recent losses of the Mexican currency against the dollar.

"We estimate that the depreciation of the peso will cause Banxico to respond with a rise of 25 basis points in November, in our opinion," the entity estimated.

Regarding inflation forecasts, the financial group projects levels of 4.6% and 4% by the end of 2018 and 2019, respectively. The Banxico has a permanent inflation target of 3%

In this way, the target rate would be 8% at the end of 2018, a level that would remain even until the end of next year, according to Santander.

The Mexican peso, in turn, which in recent days entered a new period of volatility, would close the year at levels of 19.8 units per dollar and 19.5 in 2019.

Regarding inflation forecasts, the financial group projects levels of 4.6% and 4% by the end of 2018 and 2019, respectively.

Banxico has a permanent inflation target of 3%, with a differential of one percentage point up and down.

According to the most recent official data, inflation in Mexico stood at 4.94% up to the first half of October at the interannual rate.

The price index ended 2017 at 6.77%, its highest level in more than 16 years.

So far this year, Banxico has raised the level of the target rate twice in an attempt to contain inflationary pressures, in the midst of a period of slow economic expansion.

In 2017, Mexico's GDP expanded by 2%, whose economy, the second largest in Latin America after Brazil, depends to a large extent on the productive cycles of the United States, being its main business partner.

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