A person shows dollar notes at an exchange office in Juarez city, in the state of Chihuahua, Mexico, 01 February 2024. The Mexican economy received a record of 63,313 million dollars in remittances in 2023, which implies an increase of 7.6 percent compared to 2022 and the tenth consecutive annual increase, the Bank of Mexico (Banxico) reported on 01 February 2024. EPA-EFE/LUIS TORRESIt said Latin America's second-largest economy is now forecast to grow just 0.6% this year, from 1.2% previously, and also said it now expects inflation to take longer to ease to its target of 3.0%.
"The economy could slow down even further in 2025, in an environment in which high uncertainty due to internal and external factors," it said.
It called the Trump administration's actions on migration, trade and other areas "an important" challenge for Mexican growth projections but added domestic factors were also boosting uncertainty.
Banxico, as the central bank is known, also forecast annual headline inflation for the fourth quarter of 3.3%, versus a prior projection of 3%.
While some analysts consider core inflation, which excludes volatile energy and food prices, as more reliable, the bank sees it running at the same 3.3% pace in the year's final quarter.
Still, Banxico said the inflationary environment would likely permit it to continue cutting the benchmark interest rate.
Earlier this month, Banxico cut the key interest rate by 50 basis points, saying it could cut by a similar magnitude in the future as inflation cools and after the economy contracted slightly late last year.
(Reporting by Anthony Esposito and Stefanie Eschenbacher; Editing by Christian Plumb and Sandra Maler)
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