BMI View: We expect to see a weaker Mexican consumer over the second half of 2017 on the back ofhigher inflation, tightening credit conditions, and growing uncertainty over future US-Mexico traderelations. We project that private consumption will slow to 2.5% y-o-y in 2017, down from 2.8% in 2016and 3.1% in 2015.
We have upwardly revised our forecast for real GDP growth to 1.8% in 2017 (from 1.6% previously) andmaintain our 2018 forecast at 2.0% (see 'Quick View: Upside Risks To Growth As Tertiary Sector ProvesResilient', May 1). The services sector has been the major driver of growth since 2016 and we cannot ruleout that it continues to perform above our expectations.
We maintain our belief for the retail sector to slowdown over the second half of 2017, with high inflationeating into consumers' purchasing power and with interest rates for consumers still likely to head higherin the months ahead, subduing spending.