OECD lowers forecast for Mexico’s economic growth
The Organization for Economic Cooperation and Development (OECD) recently released a report in which they reduced its expectations for economic growth both globally and for Mexico for 2018 and 2019.
In 2018, the country’s economic growth will be of 2.2%––0.3% points less than what was estimated last May, which was 2.5%––while the forecast for 2019 went from 2.8 to 2.5%. The organization noted that this reduction was in part due to lower investment activity because of the uncertainty caused by the renegotiation of the North American Free Trade Agreement (NAFTA).
However, Mexico’s Gross Domestic Product (GDP) is expected to rebound in 2019, driven by the confidence generated after the elections, as well as the increase in the level of remittances and the depreciation of the Mexican peso.
Furthermore, the organization indicated that although fiscal and monetary policies are relatively strict, the trade agreement between the United States and Mexico will most likely reduce uncertainty and will eventually support private investment.
The outlook for the country is also dependent on the fact that the world’s economic growth is expected to remain at around 3.7% in 2018 and 2019 along with other intensified risks, in an environment of greater restrictions on trade and financial vulnerabilities that deepen in emerging economies.
The OECD also pointed out that the increase in commercial tensions and the uncertainty about policies continue to be an important source of risk for global investments, jobs and living standards.