Itaú BBA - AMLO’s policymaking style

Scenario Review - Mexico

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AMLO’s policymaking style

November 8, 2018

Airport referendum results raises concerns of how future policy decisions will be made


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

Mexico’s airport cancellation rattled local markets. Aside from the fiscal costs, the result raises concerns of how future economic policy decisions will be made and the possibly waning influence of the more market friendly forces within his government.

Overoptimistic savings assumptions through better management of the public sector increase the odds of deteriorating fiscal accounts.  

Despite positive economic activity figures in 3Q18, we are keeping our 2018 estimate at 2.0% and revising it for 2019, to 2.0%, as uncertainty in domestic policy is expected to increase, likely affecting investment outlook.

We now expect a weaker exchange rate relative to our previous scenario. Despite the deceleration in headline inflation and core inflation practically unchanged in the first half of October, we now expect Banxico to hike 25 basis points on November 15. Further rate hikes will be on the table amid a still-uncertain environment.

 

João Pedro Bumachar
Julio Ruiz


 

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



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