Banxico hikes 2021 GDP growth projection to 4.8%

Banco de México improved its forecast for the Mexican economy in 2021 and now expects growth of 4.8%, up from 3.3% previously.

"Favorable news on the development, production and distribution of vaccines against COVID-19 have allowed for a more positive outlook in the medium term," the monetary authority stated in its latest quarterly report.

Mexico's economy shrank by 8.5% in 2020, according to official figures.

While emphasizing that a high degree of uncertainty prevails, particularly around the evolution of vaccination rates and the size of stimulus packages around the world, the central bank pointed to a higher growth forecast for industrial activity in the United States as an important driver for the upwards revision.

Under the monetary authority's new baseline scenario, economic activity would recover year-end 2019 levels by the end of 2022. Banco de México revised its growth projection for that year to 3.3%, from 2.6% previously.

Mexico should be able to add between 250,000 to 570,000 jobs in 2021 and between 390,000 and 590,000 jobs in 2022, the report stated, while inflation forecasts remained unchanged at around 3% in the horizon of 12 to 24 months.