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Mexico’s budget sees mostly flat growth in 2024, inflation easing By Reuters

© Reuters. A woman buys vegetables at a market stall in Mexico City, Mexico February 22, 2019. REUTERS/Daniel Becerril

By Ana Isabel Martinez

MEXICO CITY (Reuters) -Mexico’s finance ministry expects the country’s economy to expand next year roughly in line with this year’s expected growth, or between 2.5% and 3.5%, according to a draft budget document it released on Friday.

Latin America’s second biggest economy after Brazil will likely grow 3% in 2023.

The 2024 draft budget forecasts headline inflation slowing to 3.8% by the end of next year, confirming a Reuters report published earlier on Friday, compared with a 4.5% rate of rising consumer prices for the close of this year.

The official 2024 budget will now be debated by lawmakers in Congress, where the ruling party of President Andres Manuel Lopez Obrador and smaller allied parties hold a majority in both chambers.

The ministry’s draft budget estimates the exchange rate for the Mexican peso by the end of 2024 at 17.6 pesos per U.S. dollar, which if accurate would signal continued strength for the widely traded emerging market currency.

The budget assumes an average export price of $56.7 per barrel next year, the document said, well below the average of around $68 in the first eight months of 2023.

The key 2024 oil price used to estimate a large amount of government revenue also confirms the figure earlier reported by Reuters.

Crude production from Mexican state-owned oil company Pemex is seen at 1.98 million barrels per day by the end of next year, according to the budget document, a figure in which the company also adds its condensate output.

But Pemex’s overall budget will be cut 36%, compared with 2023 funding levels, according to the document.

Mexico’s central bank, known as Banxico, last week estimated headline inflation would reach 4.6% in the fourth quarter of this year while issuing a more dovish prediction for economic growth next year, or between 1.3% and 2.9%.

This story originally appeared on Investing

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