Mexican Peso slides on recession jitters following Q4 GDP slump
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Mexico’s Q4 GDP contracts for the first time since 2021. Banxico slashes 2025 growth outlook to 0.6%, well below Finance Ministry projections. US data mixed: Manufacturing PMI improves but Services PMI falls into contraction. The Mexican Peso (MXN) lost some ground against the US Dollar (USD) on Friday as the Mexican economy decelerated in the last quarter of 2024. This indicates that the outlook is not as promising as expected amid an environment of uncertainty linked to United States (US) President Donald Trump’s trade policies. USD/MXN trades at 20.41, registering gains of 0.54%. Mexico’s economy contracted in Q4 2024 for the first time since the third quarter of 2021, revealed the Statistics agency INEGI. Gross Domestic Product (GDP) matched estimates on a quarterly basis and dipped compared to the previous reading and forecasts on a yearly basis. Banco de Mexico (Banxico) expects growth this year to slow down by 0.6%, as the latest meeting minutes revealed. The Governing Board expects the economy to grow 0.6% in 2025, down from the 1.2% previously foreseen, well below the projections of Mexico’s Finance Ministry of 2.3% and beneath the Citi Expectations Survey of 1%. Given the backdrop, the USD/MXN pair shows further upside. S&P Global revealed that manufacturing activity in the United States improved. Meanwhile, the Services PMI plunged to contractionary territory for the first time since January 2023. Other data showed that Existing Home Sales plunged and the University of Michigan (UoM) Consumer Sentiment Final reading for February deteriorated further. Daily digest market movers: Mexican Peso heavy, economy projected to underperform Gross Domestic Product (GDP) shrank by -0.6% QoQ in the fourth quarter of 2024, down from a 1.1% expansion and matched estimates of a Reuters poll. On yearly terms, Mexico’s economy grew 0.5% in Q4 compared to 2023 figures. Growth for…
Filed under: News - @ February 22, 2025 6:22 pm