Mexico budget sees stronger growth, lower inflation in 2023 draft

Business

Mexican economic growth should accelerate in 2023 to around 3.0% from some 2.4% this year as inflation cools markedly and oil output picks up.

The finance ministry did not immediately respond to a request for comment about the forecasts, which were in a draft document and confirmed by two sources familiar with the matter.

The draft was not dated, but one of the people said the figures in it were up to date.

The ministry is due to present the official 2023 budget to lawmakers in Congress late on Thursday.

President Andes Manuel Lopez Obrador said on Tuesday the budget would not contain any tax increases.

Mexico’s economy has performed better than some analysts had previously expected in 2022, powered by strong demand for its goods in the United States, the country’s top trade partner. Mexican exports and imports have climbed to record levels.

However, consumer spending has faced challenges with inflation hitting its highest rate in over two decades.

The draft forecasts showed annual inflation easing to 3.2% by the end of 2023, in line with the Bank of Mexico’s prediction for the final quarter of next year. It also saw headline inflation cooling to 7.7% by December of this year from more than 8.6% during the first half of August.

In 2023, the peso currency was seen averaging 20.6 per dollar, after 20.4 this year, while oil output was seen advancing to an average of 1.872 million barrels per day (bpd) from some 1.835 million bpd in 2022, the figures showed.

According to the draft forecasts, Mexico was seen exporting an average of 784,000 bpd of oil in 2023, down from some 950,000 bpd this year, as the government seeks to refine more of its crude domestically to make the country more self-sufficient.

Those targets will depend considerably on the ability of state oil firm Petroleos Mexicanos (PEMX.UL) (Pemex) to ramp up refining.

Meanwhile, Mexico’s oil prices were seen averaging $68.7 per barrel in 2023 after hitting $93.6 this year, the draft said.

The crude price forecast was “conservative,” according to one of the people familiar with the matter, who spoke on condition of anonymity.