Daily Times

Mexico’s economy will grow by 6.2 percent this year after a deep pandemic-induced recession in 2020, the central bank predicted on Tuesday, in the latest upgrade to its forecast.

In June, the Bank of Mexico had predicted growth of 6.0 percent for Latin America’s second-largest economy in 2021, after a forecast in March of 4.8 percent.

The Mexican economy shrank 8.5 percent in 2020, according to official figures, in the worst slump since the Great Depression some nine decades ago.

In its quarterly inflation report, the central bank said that the latest upgrade was mainly due to a better than expected second quarter, when the economy grew 19.5 percent year-on-year.

Progress in Mexico’s coronavirus vaccination program and the relaxation of restrictions on economic activities helped to boost growth, it said.

The central bank said that this year’s growth could miss or exceed its central forecast within a range of 5.7-6.7 percent.

“Considering the persistence of some disruptions in global supply chains and the recent increase in the number of Covid-19 infections, there is still high uncertainty about the rate of the recovery in economic activity,” it cautioned.

Inflation is expected to remain above 5.0 percent until early 2022 before moving down towards the official target of around 3.0 percent in early 2023, the central bank forecast.

Inflation stood at 5.81 percent in July on an annual basis — outstripping the target rate for a fourth straight month.

The central bank has raised its benchmark interest rate twice this year, to 4.5 percent, in an effort to contain growing price pressures.