- In this document we make a quick recap of 2023. The last one was a year of robust growth with an outstanding performance of investment and a steady growth of consumption underpinned by a sound labour market. We expect that the economy expanded by 3.4% in 2023.
- For 2024, we expect that growth continues but at a more moderate growth of around 2.5%. We consider that a relatively lose fiscal stance could bolster consumption dynamics throughout the year and investment at least for the 1H24. The ongoing but slow materialisation of the nearshoring trend could support growth. Although headwinds related to lower growth in the US, the restrictive levels of the monetary policy and the electoral period could pose obstacles for the Mexican economy.
- We expect headline inflation to end 2024 at 3.5% and core inflation at 3.7%. As Banco de México’s balance of risks remains tilted to the upside, the Board will most likely remain cautious. However, we expect the start of a gradual easing cycle in the 1Q24.
- In terms of strategies, we continue to expect the MXN to depreciate to around 18.8 in the 1H24 and so we see value in taking long USD positions at current levels. In the short-term, we see room to take a tactical advantage in the short end of the MBono curve (2Y-3Y) and the Udibono curve (1Y-3Y) and we keep our positive directional view towards most tenors in MX local rates.