Growth forecast rises to 3.4 pct

Tuesday, 18 February 2014 00:10 Bancomer analysts cite global recovery, demand
BY KELLY ARTHUR GARRETT
The News


Citing the recovering global and U.S. economies and a resulting increase in demand for Mexican manufactured goods, analysts at one of Mexico’s leading banks have revised their forecast for 2014 Mexican GDP growth upward to a healthy 3.4 percent.

That figure, announced Monday by Carlos Serrano Herrera, head researcher for BBVA Bancomer, represents a significant jump from the previously predicted 3.1 percent for 2014, and a decided improvement over the 2013 growth rate, which is expected to come in at 1.2 percent when the final figures are available.

“Based on a number of factors, 2014 is shaping up to be a much better year than 2013 in economic terms,” Serrano said. “We also expect this coming year to establish the foundation for more economic development in the years that follow.”

Just as important, the predicted growth rate outpaces the nation’s average of 2.6 percent over the last two decades — the era of the North American Free Trade Agreement (NAFTA).

“That growth rate was not enough to generate the quality jobs needed each year to strengthen the market and improve the wellbeing of the society at large,” Serrano said.

Despite the resulting lag in competitiveness, and lackluster 2013 growth, Serrano sees a turnaround already in progress.

“At the regional level, Mexico is better positioned in terms of the various indicators of competitiveness than other Latin American nations,” Serrano said. “In fact, it outpaces the so-called BRIC countries (Brazil, Russia, India and China).”

The Bancomer report, entitled Situation Mexico, also offered a mild caution about the inflation rate, which rose in January of this year by an annualized rate of 4.48 percent.

That upward push was predictable, according to Serrano, as the new tax rates took effect. But the price increases seem to be limited to those good affected by the tax reforms.

Bancomer analysts predict an overall annual inflation rate of 4.3 percent for 2014.

With its report, Bancomer joins a recent chorus of optimistic predictions about the Mexican economy over the next several years.

The optimists got a boost earlier this month when Moody’s, the prestigious bond credit rating service, lifted Mexico’s grade from Baa1 to A3, a move that the Bancomer analysts said delivered immediate benefits, including in the value of the peso and in the Bolsa, which went up 1.24 percent as soon as the news came out.

The Bancomer report also predicted that the peso should close 2014 at about 12.9 per dollar.