MEXICO CITY, (Reuters) – The Bank of Mexico presented data yesterday that rebuffed U.S. concerns that China is using Mexico as a backdoor to avoid trade barriers for its products, while also forecasting “moderate” economic growth for the coming years.
An internal analysis of trade flows suggested the proportion of total U.S. imports coming from a “rerouting of exports from China to the U.S. via third countries” is minimal, and the fraction coming from Mexico “is even smaller.”
The quarterly report presentation by Banxico, as the Mexican central bank is known, is the first since Donald Trump’s election victory in the U.S. earlier this month.
Trump has threatened a 25% across-the-board tariff against Mexico and Canada, a move Mexico’s government has warned would lead to retaliatory tariffs and potentially lead to the loss of 400,000 U.S. jobs.
Banxico Governor Victoria Rodriguez underscored the volatility of the peso currency following the threat of U.S. tariffs, which analysts have said would fuel inflation in both countries.
She said the monetary authority was constantly monitoring the peso and markets in general and was evaluating possible scenarios, but that there has not yet been a need for the central bank to intervene in the forex market.
Rodriguez cautioned it was premature to talk about the policies of the future Trump administration before they are put in place.
In the report, Banxico slightly raised its forecast for economic growth this year while holding its forecast for 2025, but underscored that the projections only pointed to “moderate” growth over the next couple of years.
Banxico now expects 2024 gross domestic product (GDP) growth of 1.8%, up from a previous forecast of 1.5%, according to its quarterly report. It held its forecast for 2025 growth at 1.2%.
“After expanding at a relatively dynamic rate during the recovery phase of the pandemic, Mexico’s economy is expected to grow at a moderate pace in the remainder of 2024, as well as in 2025 and 2026,” Banxico said.
The central bank credited the higher estimate for 2024 economic growth to a better-than-expected growth in the third quarter.
Next year’s forecast incorporated the “expectation of a lower dynamism of private investment than previously anticipated as a reflection of the greater uncertainty associated with both domestic and external factors,” the report said.
Banxico held its inflation estimates for the end of 2025 at 3.0%, while forecasting slightly higher average annual inflation in this year’s final quarter, at 4.7% from a previous 4.4%.
