Economics: Inflation proves stubborn and public finances continue to deteriorate
Economic news over the past month included some unexpectedly positive numbers even as the economy continues to slow. Private consumption grew, but at less than half the 2023 rate, and most of the increase is coming from a forex-fueled demand for imported goods at the expense of the competitiveness and markets of domestic producers. Manufacturing remains underwater so far this year on softer US demand, with industrial production cruising at roughly half its 2023 pace.
And while annual inflation was essentially unchanged in March, the report for the first half of April, showed the most pronounced increase in 5 fortnights, including a 1.15% rebound in non core inflation from the second half of March. This could be the latest indication that the majority of the Banxico board may have reacted prematurely by lowering the real ex ante rate when approving a quarter point rate cut last March rather than respecting its mandate to focus on controlling inflation.
Public finance remains another point of concern as even the government is projecting for the current year the most pronounced fiscal deficit in three decades, with dubious promises to lower it in 2025.
This week’s Outlook offers a summary of the main indicators published in April as well as of last week’s news on economic activity (IGAE), trade, inflation and employment.
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