As the year comes to a close, here come the forecasts for the next one.
After polling economists, CNNExpansion has put together a list of five economic predictions for 2015, which it expects will be positive for the Mexican economy due to the structural reforms.
However, volatility in financial markets and uncertainty over interest rates in the United States could complicate matters.
1. Economic expansion greater than 3%: The consensus on growth of Gross Domestic Product was for 3.5% due to a low basis for comparison, the anticipated recuperation of the domestic market and economic growth in the U.S.
JP Morgan is forecasting 3.8%, because it expects a strong recovery domestically and good things in manufacturing and construction, plus the fact that stock market valuations are currently low.
Barclay’s Mexico is a bit more optimistic with its 3.9% forecast.
2. Structural reforms: There are higher hopes for countries such as Mexico and Peru, which have introduced such reforms, compared to Brazil, which has not. Mexico is seen as particularly interesting for the opening of the energy sector, which ought to boost oil production in “a significant way,” says PineBridge Investments.
3. More pressure on the peso: Analysts agree that the peso has yet to see its worst performance against the dollar due to the uncertainty over interest rates north of the border.
A Monex analyst says pressure on the exchange rate could result in inflationary pressures, spelling higher costs for producers.
4. The Mexican stock exchange will attempt a recovery: The exchange’s stock price index is down 4.03% so far this year, dragged down by international oil prices and uncertainty created by the U.S. Federal Reserve.
It’s complicated because there are signs of overreaction by the market; prices have been overly punished in spite of good fundamentals, according to Ve por Más.
The forecast is for the index to rise 13% in 2015, to close the year between 45,000 and 46,000 points.
5. Social protests will continue: Increased violence, faults in the justice system and social protests represent a risk. Bank of America Merrill Lynch believes those issues are probably affecting growth, and that the protests will continue through to the elections in June.
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