HSBC Research forecasts an economic growth outlook for Mexico thanks to the investment attracted by nearshoring.
Foreign direct investment (FDI) in Mexico could oscillate between 35 and 40 billion dollars in 2023, driven by nearshoring, which would be key for the Gross Domestic Product (GDP) to grow 1%, estimated HSBC Research.
The financial institution has a positive economic outlook for the country this year, due to macroeconomic strength and the arrival of some catalysts, such as the overcoming of inflation and interest rate peaks at a global and local level, which will lay the foundations for a stronger investment positioning.
The combination of resilience in economic activity, opportunities and implications of nearshoring, falling inflation, the end of rate hike cycles and solid external and fiscal accounts will be key factors for Mexico in 2023.
“We have a constructive economic outlook on Mexico in 2023, despite global and local challenges, which is based on: resilient GDP growth of 1.0%, with an upward bias, supported by nearshoring opportunities that could translate into foreign direct investment (FDI) of $35-40 billion in 2023.”
Last November, the Ministry of Economy reported as of the third quarter of the year that preliminary foreign direct investment amounted to 32,147.4 million dollars, an increase of 29.5% compared to the same period of 2021 and the highest since 1999 for a similar period.
Likewise, HSBC states that the drop in inflation, which it estimates will remain at a level of 4.5% year-on-year, added to the stabilization of inflation expectations, will create room to reduce the reference rate by 100 basis points in the second half of the year; in fact, it expects it to close at 9.75%.
“This does not mean that the country’s restrictive monetary policy stance will be withdrawn, since our monetary policy rate path implies an ex-ante real rate of around 6.0% in 2023, thanks to the space that the gradual fall in inflation expectations will open up,” it specifies.
The financial institution also states that the orderly external accounts, led by strong and sustainable inflows, combined with contained trade and current account deficits, and the solid short-term fiscal position will also help significantly, despite a small primary deficit in 2023.
Source: Forbes Mexico
