AMLO, risks starting from the wrong foot: FocusEconomics

On the verge of assuming the post of President of Mexico, Andrés Manuel López Obrador "runs the risk of starting his government on the wrong foot, with capital outflows, a fall in the peso and possibly a reduction in expectations," says the consultant FocusEconomics.

The firm takes as an example the negative revision of Fitch's perspective of Mexico's sovereign rating, to find that "it seems to be vanishing the old facade of the elected president, which seemed to be the friend of the market ".

In the consensus forecast of LatinFocus for November, the average growth forecasts for 2018 and 2019 remained unchanged at 2.2% respectively.

They highlight the nuances and give voice to one of the panelists consulted: Alexis Milo, chief economist of HSBC, who warns against "obstacles in the transition regarding the continuity of certain projects".

"We expect economic activity to continue to accelerate over the next few quarters, but the transition between the two administrations tends to face obstacles, such as the continuity of some projects, which will generate administrative inefficiency and lead in early 2019 with significant challenges, "says the strategist.

"For the moment, we expect an economy that will continue to grow, in a healthy dynamic for the next quarters," he says, "but we anticipate an increase in the uncertainty of the factors which will impose significant challenges. "

In the news, three brokerages and consulting firms lowered their economic expansion forecasts, offset by increases in GDP forecasts by six brokerage firms.

Regarding growth forecasts for 2019, Goldman Sachs' forecasts were the most optimistic, estimating an expansion of 2.8%. In contrast, the US House forecasts a GDP of 1.5%.

First look at 2020

As FocusEconomics usually does in the November report, he asks if they already have two-year forecasts. As a result of this exercise, 15 of the 42 groups consulted refrained from publishing forecasts.

The consensual forecast, among those who responded, predicts an expansion of the economy by 2.4%.