How low will it go?
Mexico's central bank reported today that economists and business advisers whom it regularly surveys have warned that the nation's gross domestic product (PIB/GDP) will grow by no more than 2.3% in 2014. It was the fifth time since May 7 the survey group cut its prognosis for the year ending Dec. 31, from an original 3.01% to 2.77% to 2.56% to 2.47%.
In the latest reduction to 2.3%, 26% of survey respondents cited national security woes, especially in violent Guerreo and Tamaulipas, as a negative pull on domestic economic expansion - the highest vote on that question since May 2011, when 28% of consultants did so.
Mexico's economy grew but 1.1% in 2013. But at the beginning of 2014, the PRI administration of president Enrique Peña Nieto - now about to complete 24 months in office - confidently predicted robust growth of 3.9% in the year ahead. The numbers have never come close to that.
On Nov. 1, the government's Finance Ministry insisted that 2014 PIB would expand at least 2.7% by Dec. 31, far below its original estimate. But analysts dispute even that number. Every private bank and investment consultant group, as well the central bank and the Finance Ministry itself, has been forced to downward revise its growth estimate this year. Merrill Lynch: weak U.S. demand, domestic insecurity will continue to challenge Mexican economy in 2014.
Mexico's central bank, the Bank of Mexico (Banixco), operates much like the U.S. Federal Reserve Bank. Its director may not be dismissed for political reasons and is not answerable to the president, the congress or federal agencies, other than for the presentation of economic reports and forecasts. For that reason Banixco frequently delivers less optimistic reports than the Finance Ministry.
Nov. 19 - Banixco officially reduced its 2014 growth estimate today, reporting that Mexico's economy is unlikely to expand by more than 2.0-2.5% in the year ending Dec. 31.
Nov. 21 - Today Mexico's Secretaría de Hacienda y Crédito Público - the official name of the Finance Ministry - abandoned its 2.7% prediction and essentially accepted the accuracy of Banixco's, with a prediction of 2.1-2.6% growth in PIB. But both estimates could be further reduced as the year comes to a close.
Dec. 2 - Banixco's private analyst survey group further reduced its 2014 GDP estimate today, from 2.3% to 2.19%.
Nov. 2 - "Our economic situation has made us a dysfunctional society."
Aug. 13, 2014 - Mexican economy remains stuck on a southbound train
Dec. 28, 2012 - Mexico pays enormous price for domestic insecurity
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