Itaú BBA - AMLO’s government begins

Scenario Review - Mexico

< Back

AMLO’s government begins

December 13, 2018

Domestic markets were rattled after several radical legislative initiatives emerged.


For the full version with all charts and tables, please open the attached pdf file

AMLO was sworn in as President, criticizing the neoliberal economic model implemented in Mexico over the last two decades during his first speech. He also promised responsible public finances and that he would respect Banxico autonomy.

More public consultations on policy issues are expected. Also, domestic markets were rattled after several radical legislative initiatives emerged from Morena’s coalition (although most of them don’t have AMLO’s support). 

We expect economic activity to grow 2.0% in 2018. However, we are revising our growth expectation down for 2019 and 2020, to 1.7%, as the U.S. economy decelerates and uncertainty over domestic policy direction hits business confidence and investment, which are also affected by worse financial conditions.

November’s headline inflation surprised to the upside, reinforcing our call for an additional 25-bp hike in Banxico’s next monetary policy decision (December 20). Moreover, we expect an additional 25-bp hike in 1Q19, amid increasing risks for the currency and, consequently, inflation.


 

João Pedro Bumachar
Julio Ruiz


 

For the full version with all charts and tables, please open the attached pdf file



< Back