DALLAS, Texas – There is hope that a strong, expanding U.S. economy and a bright global outlook will support brisk Mexican growth in 2018, says Federal Reserve Bank of Dallas senior business economist Jesus Cañas.

Additionally, domestic consumption is expected to increase as inflation decelerates and wages catch up to prices.

Cañas gives his analysis in the Spotlight section of the latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy.

“The Mexican economy faces several sources of continued uncertainty – notably the NAFTA (North American Free Trade Agreement) renegotiation and the presidential election in July,” Cañas writes.

“But, while political headwinds abound, there is room for optimism.”

Cañas said inflation is expected to drop to 3.6 percent by year-end, according to a Banco de México censenus forecast, while labor markets are likely to remain tight.

“Unfortunately, investment is unlikely to recover absent clarity on NAFTA and the election. Public investment may contract further as fiscal consolidation continues,” the economist states.

The Banco de México consensus GDP growth forecast for 2018 calls for a slight acceleration in activity to 2.3 percent annual average growth, Cañas reports.

Editor’s Note: The main image accompanying the above story shows Jesus Cañas holding a copy of his 2016 book, “Ten-Gallon Economy – Sizing Up Economic Growth in Texas.”