Economic Outlook: Executive Summary

Economic
Outlook
Base Scenario | Unfavorable Scenario | Favorable Scenario
September 1, 2022
Executive Summary
Global: In Q2 2022, the global economic growth shrank due to a high inflation that weighed on real
disposable income. Analysts cut our GDP forecast for 2022 amid the impact of Covid-19, the real estate
bubble and a record drought. Japan expanded in Q2 2022 driven by domestic consumption, although risks
remain. The Eurozone’s services PMI points to a recession at the end of this year, on the back of high prices
driven by natural gas.
US: US GDP was revised upward for Q2 2022 following an increase in consumption and a lower inventory
rebalancing. In the short term, the US economy will continue to be driven by strong employment and gross
national income, although by 2023, GDP will trend lower given a persistent inflation and higher interest
rates.
Mexico: INEGI revised Mexico’s Q2 2022 GDP downward. While some analysts raised their 2022 GDP
forecasts, at HARBOR we maintained our estimate (1.8%). This since we foresee that in the second half of
2022 and in 2023 Mexico's economic activity will decelerate due to: lower economic dynamism in the US,
inflationary pressures, rising interest rates and almost no private investment. Nevertheless, GDP will be
sustained in part by continued external demand, nearshoring and consumption (remittances).
LATAM: Productive investment will be limited in LATAM for what remains of 2022 and 2023 due to high
interest rates and strong political uncertainty and instability. This will be exacerbated in Brazil and
Argentina ahead of presidential elections in Oct. 2022 and late 2023, respectively. Peru, Chile and Colombia
were driven by consumption, although business distrust is pointing to a slowdown.
harbor@askharbor.com • Trébol Park P. 17, Av. Lázaro Cárdenas No. 2424, Res. San Agustín
San Pedro Garza García, N.L., MÉXICO 66220 • Tel. +52 81 8363 8360
Global
In Q2 2022, the global economic growth shrank due to a high inflation that weighed on real
disposable income. Analysts cut our GDP forecast for 2022 amid the impact of Covid-19, the
real estate bubble and a record drought. Japan expanded in Q2 2022 driven by domestic
consumption, although risks remain. The Eurozone’s services PMI points to a recession at the
end of this year, on the back of high prices driven by natural gas.
World Graph 1. Global real disposable income

In Q2 2022, world economic growth tumbled. Annual % growth
According to Fitch Ratings, the global economy is likely to contract in

quarterly terms during Q2 2022. This following a worse-than-expected
downturn in China, a contraction in US GDP, a likely decline in Russian
output, a slump in real global household income (demand destruction)
(see graph 1), as well as higher-than-expected global inflation (especially
in the US and major European economies) that has triggered a
tightening of financial conditions. All the above reinforces a moderation
of inflation going forward.
Source: Refinitiv Datastream; Dallas Fed; Allianz Research.
China
Different institutions cut their estimate of China's GDP for 2022 (see graph 2), mainly due to the zero-tolerance
policy for Covid-19, the fall of the real estate sector, the hydroelectric crisis due to a record drought, a youth
unemployment rate of almost 20% in cities and growing tensions with the US over Taiwan.
HARBOR and other analysts cut our estimate of China's economic growth in 2022 to a figure far from the government's
annual target of 5.5%, and, for the most part, below the consensus of 3.8% in Bloomberg's survey among economists. This cut is
mainly due to 1) the beginning of the collapse of the real estate bubble (see graph 3), reports of Ponzi schemes and mortgage
defaults, 2) the continuation of the zero-tolerance policy towards Covid-19, 3) a hydroelectricity supply crisis following a record
drought in decades, 4) the high youth unemployment rate (1 in 5 16–24-year-olds are looking for jobs) and 5) growing tensions
with the US over Taiwan.
On the one hand, Fitch Ratings believes that the problems in the real estate sector risk filtering through to secondary industries,
such as asset management, construction and steel companies. In addition, the exacerbation of the drought has generated a
hydroelectric crisis, putting downward pressure on the commodity industries that provide the basic components of the global
economy. Indeed, the government's strategy towards the economic slowdown and leveraged real estate has been to reduce its
target interest rate to a level of 3.65% (vs. 3.70% previous) and lend money to developers to finish their projects and avoid a real
estate crisis. In this regard, BHP CEO Mike Henry expects China to be a source of stability for commodity demand in 2023
following public policy support.
However, at HARBOR we estimate that government stimulus will be insufficient to prevent an economic slowdown and that
the zero-tolerance policy will continue. Michael Pettis, a professor at Peking University, believes that a financial crisis or sharp
economic contraction is unlikely, and that "it is much more likely that the country will face a very long, Japan-style period of low
growth". In addition, Gordon Chang, a specialist and columnist of the Chinese regime, believes that China's current economic and
political situation could prompt it to go to war with Taiwan to unify China and stimulate the economy.
Graph 2. China’s GDP forecast for 2022 Graph 3. China house prices
Annual % average growth Annual % growth
5.0 Previous Current 11
4.4
4.5 9
4 4
4.0 3.6 7
3.5 3.2 3.3 3.3
3 3
2.8
5
3.0
3
2.5
2.0
1
HARBOR Oxford Goldman Nomura ING -1 -0.9
Economics Sachs Jan-18 Dec-18 Nov-19 Oct-20 Sep-21 Aug-22
Source: HARBOR economics with own forecasts, Oxford Económics, Goldman Sachs,
Source: HARBOR economics with information from Bloomberg.
Nomura and ING.
HARBOR economics · Economic Outlook SEPTEMBER 2022 2
Japan
In Q2 2022, Japan's GDP grew 2.2% quarter-over-quarter annualized (vs. 1.9% 2Q 2021) due to a rebound in
consumer spending following the end of mobility restrictions.
In Q2 2022, the Japanese economy was driven by domestic demand and capital spending. In June 2022, retail sales grew 1.5%
y/y (vs. 0.1% June 2021). However, Bloomberg analyst Yuki Masujima commented that in Q3 2022 he expects a slowdown in
economic growth due to a rise in Covid-19 cases and persistent producer price inflation (8.6% Jul 2022 vs. 5.6% Jul 2021). In July
2022, the services PMI decreased to 49.2 points (vs. 51.2 June) contracting for the first time since March 2022 amid fears of
reimposition of confinement measures. Meanwhile, the manufacturing PMI slowed to 51.0 points (vs. 52.1 June) due to a a
slowdown in demand from its main trading partners (China, the US and Europe). Usamah Bhatti, economist at S&P Global, indicated
that "the strongest concerns among Japanese private sector companies are the impact of the Ukraine war, inflationary pressures
due to raw material and energy costs, and a global economic slowdown."
However, at HARBOR we estimate that economic growth will remain constrained going forward, due to:
1) Potential new Covid-19 outbreaks leading to the reimposition of Graph 4. Consumer inflation
Annual % growth
mobility restrictions.
3 2.6
2) Rising inflationary expectations. In July 2022, consumer inflation 2
increased (see graph 4). In this regard, Kishida will implement 1
additional support for food, energy and economic regions. 0
-1
3) A lower economic growth outlook for China due to its zero
-2
tolerance policies, drought and real estate crisis. ene.-20 jul.-20 ene.-21 jul.-21 ene.-22 jul.-22
Jan-20 Jul-20 Ene-21 Jul-21 Jan-22 Jul-22
Source: HARBOR economics with information from Investing.
Eurozone
The weakening of economic activity in the European monetary bloc, following the downward trend of the
services PMI and rising inflation expectations, point to an economic recession as of Q4 2022.
In Q2 2022 GDP was boosted by higher consumption and tourism following the easing of mobility restrictions by Covid-19. However,
in August 2022 Eurozone Q2 2022 GDP was revised down (3.9% YoY vs. 4.0% prior) and the trajectory of the services PMI
indicates that the European currency bloc is on track for a recession in the coming months (see graph 5), and faster than the
2008-09 financial crisis and the 2010-11 European debt crisis.
In August 2022, inflation in the Eurozone expanded 9.1% annually, Graph 5. Eurozone servicies PMI
Points. Number above 50 indicate an expansion.
reaching its highest level since the indicator has been
recorded. The Financial Times comments that economists expect the
annual change in inflation to accelerate from August's record level to
over 10% in October. This is mainly due to the reduction of Russian
gas flows, which has led to high European gas prices and the fall of
the euro below parity with the dollar. In the fourth week of August,
the European gas price reached a record of EUR 343 per MWh, more
than double that at the end of July and 7 times higher than in the same
period of 2021.
Number of months after the downtrend started in the services PMI
Source: HARBOR economics with information from IHS, Commerzbank Research.
Going forward, at we HARBOR estimate that the Eurozone will
succumb to a recession by the end of 2022, with a double-digit
Graph 6. Inflation and GDP forecast for 2023
inflation rate by autumn and thus a tighter ECB stance. Andrew Annual % growth
Harker, economist at S&P Global, stated that the numbers "point to a
contracting economy during Q3 2022" and that there are currently
declines in output in several sectors, from basic materials and
automotive to tourism and real estate. However, Jessica Hinds, chief
economist at Capital Economics, expects "the slowdown to be fairly
shallow and short-lived," with a recovery in activity by Q2 2023 and
partial work schemes cushioning the blow, especially in the German
manufacturing sector. Source: HARBOR economics with information from Consensus Economics.
For 2023, the Financial Times mentioned that as the year has progressed, economists have revised upward and downward their
forecasts for inflation and economic growth, respectively (see graph 6). This pattern of stagflation is consistent with our
estimates for the coming year.

United States
US GDP was revised upward for Q2 2022 following an increase in consumption and a lower
inventory rebalancing. In the short term, the US economy will continue to be driven by strong
employment and gross national income, although by 2023, GDP will trend lower given a
persistent inflation and higher interest rates.
In Q2 2022, GDP was revised upward to -0.6% QoQ Table 1. Changes in the components of US Q2 GDP
Quarterly annualized % growth (Seasonally adjusted)
annualized (vs. -0.9% previous) following a moderate
Component Revision Previous
recovery in consumption and a smaller drop in inventory
Real GDP -0.6 -0.9
investment...
Personal consumption 1.5 1
The US economy contracted in Q2 2022 at a slower pace than Nonresidential Investment 0 -0.1
previously estimated mainly due to higher consumer spending (see Residential Investment -16.2 -14
Table 1). Additionally, the US Bureau of Economic Analysis decreased the
Exports 17.6 18
negative impact of a slower phase of private sector inventory
Imports 2.8 3.1
accumulation. The inventory adjustment subtracted -1.83 percentage
points from Q2 GDP growth (vs. -2.01 p.p. previous estimate). Government spending -1.8 -1.9
Source: HARBOR economics with information from BEA.
... and in the short term we expect it to continue to be driven by the strength of the labor market, as well as
the resilience of gross domestic income and retail sales.
The US Commerce Department mentioned that an alternative measure of growth that measures the economy from an income
standpoint (Gross Domestic Income - GDI) continued to rise (see graph 7). In this regard Daniel Silver, an economist at JP Morgan,
stated that they "continue to believe that the decline in real GDP in the first two quarters of the year does not meet the NBER's
definition of a recession, and if the GDP data is revised upward to be more consistent with the GDI data, the first half of the year
may end up looking stronger than the data currently shows.“
On the other hand, the labor market continued to rise. July 2022 saw 528k nonfarm payrolls added and job openings
unexpectedly rebounded (11.2 million vs. 10.5 million expected; 11.0 million in June). The latter has led to a robust wage growth,
which has been reflected in the resilience of US consumption (see graph 8). However, according to ADP, non-farm employment
disappointed in August (132 thousand payrolls vs. 200 thousand estimated).
Graph 7. Real GDP vs. Real GDI (Gross Domestic Income) Graph 8. Retail trade
QoQ % annualized growth Billiion dollars
600
GDP 550 Nominal retail sales
20.0 GDI
500
Real retail sales
0.0
450
-20.0
400
-40.0
350
Apr-19 Oct-19 Apr-20 Oct-20 Apr-21 Oct-21 Apr-22
Jul-17 May-18 Mar-19 Jan-20 Nov-20 Sep-21 Jul-22
Source: HARBOR economics with Fred data. Source: HARBOR economics with data from Fred.
Nevertheless, by 2023 we estimate that the US economy will trend downwards due to a gradual deterioration
of employment (see graph 9), lower disposable savings (see graph 10),...
Graph 9. NFIB plans to increase employment Graph 10. Personal saving as a percentage of disposable
% of respondents* personal income Percentage
24
14
4
Source: HARBOR economics with data from NFIB. * % that plans to increase the Jan-16 Apr-17 Jul-18 Oct-19 Jan-21 Apr-22
number of employees minus those that plan to decrease it in the next three months. Source: HARBOR economics with Fred data.

...and demand destruction in the face of an inflation that remains well above the Fed's target.
In July, consumer inflation slowed to 8.5% YoY (vs. 9.1% June) mainly due to a monthly drop in oil prices leading to lower
gasoline prices. Nonetheless, core inflation, which strips out the most volatile products, continued its pace of expansion
(5.9% YoY). Inflation levels which remain historically high have led US consumers to change their consumption habits (see graphs
11 and 12). At HARBOR, we estimate that continued high inflation levels, a downward trend in employment, coupled
with slower wage growth will lead to demand destruction in 2023.
In this regard, at HARBOR we estimate that, while inflation will continue to remain well above the Fed's target, it will
tend to decelerate in 2023 (4.4% annual avg. in 2023 vs. 8.3% in 2022). This is due to demand destruction, a drop in
commodity and energy prices, coupled with a significant slowdown in housing prices. A Reuters survey of real estate analysts
during August 12-30 showed that experts estimate that in 2023 house price growth will slow to its slowest pace since 2012.
Graph 11. “Trade down” shopping behavior Grapg 12. Essential vs. Discretionary demand
Index January 2021=100
Share of responses (out of the 74% that replied “traded down”)
Source: Bloomberg.
Source: HARBOR economics with Mckinsey data.
Additionally, the US economy will be weighed down by a tightening Fed monetary policy....
At the recent Jackson Hole Central Bank Symposium, Jerome Powell Graph 13. Likelihood of 75 b.p. Fed rate hike in September 2022
% of probabiility
reaffirmed his hawkish stance amid persistent global inflationary risks.
As a result, the probability of a 75-basis point hike in the Fed's
benchmark interest rate in September rebounded (see graph 13).
In this sense, at HARBOR we estimate that the Fed will raise its
interest rate by 75 b.p. in September to the 3.0-3.25% range and
will even continue to increase its rate to 4.0-4.25% by March 2023.
Source: Daily Shot.
...leading to a deterioration in the services sector, industrial production and investment in the residential
construction sector.
In August 2022, the services PMI fell below 45 points, indicating a contraction, while manufacturing slowed for the
fourth consecutive month (see graph 14). This was mainly due to a shortage of materials, delays in deliveries and production,
as well as high interest rates making credit more expensive. PMIs were also affected by high producer inflation. In July 2022,
manufacturing producer prices rose 17.4% YoY, while on the services side, delivery and storage and transportation
prices rose 12.0% and 19.4% YoY, respectively.
On the other hand, in July 2022, new home sales plummeted -30% YoY (vs. -17% June) and -13.4% MoM (vs. -8.1% June) due
to persistently high home prices, coupled with higher mortgage rates amid higher interest rates. Going forward, we estimate
that this, coupled with lower consumer confidence (see graph 15), will continue to weigh on the real estate sector.
Graph 14. Manufacture and services PMI Graph 15. Buying conditions for goods and Consumer sentiment
Points Points
Manufacture
70 Services
60
50 51.3
44.1
40
Jul-20 Mar-21 Nov-21 Jul-22
Source: HARBOR Economics with information from Investing.
Source: Bloomberg.
In this context, we estimate a slowdown in the US economy to 0.5% annual average in 2023 (vs. 1.7% in 2022)
and we do not rule out a contraction of -0.6% in an unfavorable scenario.
Mexico
INEGI revised Mexico’s Q2 2022 GDP downward. While some analysts raised their 2022 GDP
forecasts, at HARBOR we maintained our estimate (1.8%). This since we foresee that in the
second half of 2022 and in 2023 Mexico's economic activity will decelerate due to: lower
economic dynamism in the US, inflationary pressures, rising interest rates and almost no
private investment. Nevertheless, GDP will be sustained in part by continued external
demand, nearshoring and consumption (remittances).
INEGI revised Mexico’s Q2 2022 economic growth slightly downward (0.9% QoQ vs. 1.1% preliminary estimate).
Despite this, some analysts raised their forecasts for Mexico's average YoY GDP for 2022 (see graph 16).
Graph 16. Mexico’s 2022 GDP forecasts
The upward revision to Mexico's average annual GDP forecasts for 2022
YoY % average growth
by certain analysts was partly driven by: 3
1. The upward revision of GDP results during Q1 2022. 2.3 2.2
Prior
previo Current
nuevo
2.0 1.9 2.0 1.9
2 1.7 1.8
2. Expectations that Mexico will be resilient at least through 2022 to 1.5 1.6
the US economic slowdown.
1
Unlike HARBOR, Oxford Economics does not foresee "a recession in
both the US and Mexico, even if domestic demand declines due to 0
record inflation and tighter monetary policy". Barclays Valmex Credit Suisse CEPAL Bursametrica
Source: HARBOR economics with information of the mentioned institutes.
However, at HARBOR we maintained our 2022 GDP projection for Mexico (1.8% annual average) given that in
the second half of the year and towards 2023, economic activity will tend to moderate (see graph 17)...
At HARBOR and other analysts (BNP Paribas, Monex, Signum, among Graph 17. Mexico’s GDP forecasts
others) we anticipate that Mexico's economic activity will slow down YoY % growth (original figures); QoQ % growth (seasonally adjusted figures)
amid: 2.5
2.0
1. High inflation that will limit consumer confidence will constraint the 2.0 1.9
1.5
real disposable income that people have. 1.5 1.3
1.0 0.9 0.8 0.7 0.8
0.5 0.5 0.7
2. Lower industrial dynamism in the US, which will lead to a further 0.0
0.0 -0.1 -0.2 0.1
slowdown in manufacturing (one of Mexico's economic engines). -0.5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
3. High interest rates and generalized increases in commodity prices 2022 2023
that discourage investment. Source: HARBOR economics with INEGI’s information and own projections.
...due to: 1) a slowdown in external demand (US, see pages 8 and 9), 2) the persistent inflationary pressures (see
graph 18)...
In August’s first half, Mexico’s CPI rose 8.6% YoY (vs. 8.5% estimated) and the core component increased 8% YoY. Several analysts
anticipate that although inflation will tend to decelerate very gradually, price increases will remain above Banxico's target
for the rest of 2022 and in 2023 (see graph 18). Marcos Arias, analyst at Monex stated that inflation will remain above 8.0% YoY at
least until November 2022 and that in an unfavorable scenario a new shock in the economic outlook could "easily lead to a 9%
inflation". We anticipate that this will continue dampening consumer spending on durable and non-essential goods (see graph 19).
However, going forward, inflation will begin to impact spending related to food products and services.
Graph 18. Mexico’s 2022 CPI forecasts Graph 19. Spending changes driven by inflation
December-December YoY % average growth % of responses
9
7.7 7.9 7.7 8.0
8.3 8.5
7.6 8.1 7.8 7.9
Saved less 13
2nd hand purchases 15
6
5.15.2 Withdrawal savings 16
4.7 4.6 4.4 4.54.7
Changed brands or products 19
3
Has selled stuff 22
Abandoned activities of capital 32
0
BofA Media Invex Morgan HARBOR
Already cut some spending 47
Citibanamex Stanley
2022 previous 2022 current 2023 previous 2023 current 0 10 20 30 40 50
Source: HARBOR economics with Citibanamex’s Information and own projections. Source: HARBOR economics with El Financiero’s Information.

...and 3) Banxico’s historically high interest rates.
In August 2022, Banxico raised its interest rate by 75 b.p. to 8.5%. In addition, at its monetary policy meeting, certain members
considered that there is still room for the Central Bank to continue hiking its interest rate. Subsequently, Jonathan Heath, deputy
governor of Banxico, stated that, given the Fed's aggressive monetary stance, in Mexico "...we cannot afford the luxury of
separating ourselves (narrowing the rate differential) at least for the next six months, at least until the end of the year. I would not
even consider it". In this context, the median of Citibanamex survey participants forecasts (fifth consecutive month) that the interest
rate will close 2022 at 9.5%. At HARBOR, we estimate it will close at 9.75%.
At the same time, private investment will be constrained by the conflicts regarding the USMCA and the
country’s insecurity.
The US announced the The USMCA The dispute resolution If the panel is Panelists would have
dispute settlement consultations between 150 days to issue an
2022
may be announced, or requested, the 3 or 5

consultations’ request Mexico-US began with a dispute resolution panelists chosen by the initial report. 30 days
and Canada joined the at most 75 days to panel may be USMCA’s members later they would present
complaint. reach an agreement. requested. would be appointed. a final resolution.
July 20 August 23 October 3rd* November 3rd* May 1,2023*

*El Financiero’s estimated dates.
Source: HARBOR economics with El Financiero’s information.
Kenneth Smith, former chief negotiator of the USMCA, stated that it is "...difficult to solve at that stage of the dialogue [before the
panel]". Meanwhile, Juan Machorro, partner of the law firm Santamarina y Steta, argued that "if the technical and legal aspects are
taken into account in the consultation dialogues, we have everything to lose. It is very difficult to prove in the consultations and
panel stages that there are no violations by Mexico”. At HARBOR we expect that the US will request a dispute settlement panel
and that Mexico will lose. This would imply tariffs’ imposition on several Mexican export products such as agricultural and livestock
products, and fines for damages, especially in the energy sector.
In addition, Citibanamex’s chief economist, Adrian de la Garza, projected that beside the economic sanctions, the credit rating of
Mexico’s sovereign debt would be reduced, increasing some fiscal costs. According to de la Garza, "this government is willing to
assume, above all thinking that electorally [...] in the polls where it can be seen that the electorate supports this idea that the
government has of energy sovereignty and in that sense, we think that it can be something that can be used as a political tool
towards 2024".
This, coupled with other factors, will continue to weigh on business confidence. Jacobo Rodríguez, director of economic analysis at BW
Capital, predicts that business pessimism has been exacerbated (see graph 20) by: 1) the weakness of the domestic market, 2) the
fragility of the rule of law, 3) the increase in organized crime in the country, and 4) the disputes surrounding the USMCA.
...which could exacerbate the automotive industry’s Graph 20. Businessmen confidence index
Points. Number below 50 indicates contraction.
deterioration.
56 Manufacture
The Mexican Automotive Industry Association (AMIA) former president 54.8 Construction
stated that automotive sales in Mexico continue to be 19.4% below 54 53.3 Services
their pre-pandemic levels, while production and exports continue to Trade
be 16.5% and 21% below that level. Also, the former president stated 52 51.9
51.0
that although there is a willingness to invest in semiconductor plants in 51.5 50.8
50
Mexico, this would imply incentives of between 800 and 1 billion dollars 49.3
that "we do not see who could give them". In this sense, Eduardo Solís, 48 48.3
director of Msquare Consultores, estimates new car sales in Mexico Mar-22 Apr-22 May-22 Jun-22 Jul-22
will recover their pre-pandemic levels until 2025. Source: HARBOR economics with INEGI’s information.
Meanwhile, inefficient public investment will have a very limited positive impact on Mexico's GDP.
From May 2019 to July 2022, the cost of the Dos Bocas refinery has risen 27.5% (vs. $8 billion dollars budgeted). Likewise, López
Obrador acknowledged that the costs of the Mayan Train have also increased, and it could end up costing up to $20 billion
dollars (70% more than planned). According to IMCO this "...implies an opportunity cost in terms of resources that have not been
spent in other areas such as health, education or public safety". At HARBOR we estimate that, although the projects will have a
positive impact on GDP, this will be short term and limited.
However, in 2023 GDP will still be driven in part by US demand and the nearshoring effects.
JP Morgan estimates that despite a slowdown in US GDP and the risk of an economic recession in the US, "Mexico could prove tobe
more resilient than in the past under this scenario given strong consumption trends, supportive remittances and solid fundamentals.
Likewise, nearshoring will also accelerate the country's economic activity, although the magnitude will depend on how much itis
leveraged. JP Morgan forecasts that Mexican exports could increase by 16 to 34 billiondollars per year over the next five years. In
this context, at HARBOR we foresee that Mexico's GDP will grow 1.0% YoY average in 2023.
Latin America
Productive investment will be limited in LATAM for what remains of 2022 and 2023 due to
high interest rates and strong political uncertainty and instability. This will be exacerbated
in Brazil and Argentina ahead of presidential elections in Oct. 2022 and late 2023,
respectively. Peru, Chile and Colombia were driven by consumption, although business
distrust is pointing to a slowdown.
LATAM
In 2023, the average of Bloomberg analysts anticipates that although inflation will tend to go down, it will
remain high (see graph 21). This will lead LATAM Central Banks to keep their interest rates high (see graph 22),
which will limit economic activity in the region.
Graph 21. Expected inflation in LATAM Graph 22. Expected interest rates in LATAM
% annual growth %
14.0 Brazil 16.0
12.0 14.0 Brazil
Chile
12.0 Chile
10.0 Colombia
Colombia
8.0 Peru 10.0
Peru
8.0
6.0
6.0
4.0
4.0
2.0 2.0
0.0 0.0
Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23
Source: HARBOR economics with information from Bloomberg Source: HARBOR economics with information from Bloomberg.
Argentina
In the first half of 2022, GDP grew 6.5% annual avg. given an increase in manufacturing and trade. During July,
inflation continued to expand (see graph 23), and the analysts’ average consulted by the Central Bank
anticipates that this trend will continue towards the end of 2022...
Graph 23. Argentina’s inflation rate Graph 24. Argentina’s inflation forecasts
Annual % growth Monthly % growth
8.3
80 71.0 7.3
7.5
Apr-22
Jun-22
May-22
Jul-22
7.2
65 57.3 54.5 64.0 6.3 6.0
50 48.5 50.3 5.3 5.1
48.8 50.7
4.3 4.9
50.5 4.3 4.4
4.3
35 25.0 34.4
36.1 3.3
20 2.3
1.3
Jan-18 Jul-19 Jan-21 Jul-22 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
Source: HARBOR economics with information from INDEC of Argentina. Source: HARBOR economics with information from Argentina’s INDEC.
...which could be aggravated by a greater control of imports given the persistent leakage of dollars (see graph
25) as the exchange rate gap continues to widen (see graph 26).Graph 26. Argentina’s exchange rate gap
Graph 25. Argentina’s international reserves %
Billion dollars
160
80
77.5
120
66.3
65 66.3
80
56.0
50 45.2 40
43.3 41.5 43.1
45.2 37.0 0
35
Aug-18 Aug-19 Aug-20 Aug-21 Aug-22
Aug-19 Aug-20 Aug-21 Aug-22
Source: HARBOR economics with information from INDEC of Argentina. Source: HARBOR economics with information from Ámbito, Argentina’s Central Bank
and own estimations. | * The exchange rate gap is calculated as the percentage
difference between the official exchange rate and the spot rate (black market).

The latter in a context of high political uncertainty and instability in Argentina due to the recent cabinet
changes, the trial of the vice-president, and the presidential elections in 2023.
Disapproval of Fernández's government is high (see graph 27) due to the Graph 27. Approval of Alberto Fernandez's
population's discontent with high inflation. At HARBOR we estimate government % of answers
that this and the persistent political instability will limit DA/DK* Approves Disapproves
governability in Argentina. On one hand, the trial of the vice-president 4.1

could weaken the ruling coalition ahead of the 2023 presidential
elections and, on the other, the constant changes in the cabinet limit the 26.7
effectiveness of public policy. The latter as during August the Minister of
Economy was replaced again, and although Bank of America considers
that the replacement had positive effects, at HARBOR we estimate 69.2
that Minister Massa has a limited margin of maneuvering in the
face of the complexity of Argentina's economic problem. Source: HARBOR economics with information from CB Consulting. *Didn’t know
or Didn’t answer.
Brazil
Brazil's economy has been driven (see graph 28) by a drop in unemployment, which has allowed for an
expansion of the services sector (see graph 29).
Graph 28. Brazil GDP tracking indicator Graph 29. Brazilian consumption indicators
Annual % growth Annual % av. growth / % (Jan-Jun of each year)
10 20.0
8.7 14.6
8 15.0 12.5
9.5 10.6
6 10.0 6.9
4 4.4 5.0
2.7
2 1.9
3.1 0.0
0
Services
-5.0
Unemployment rate
-2 -10.0
-8.4
Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 2020 2021 2022
Source: HARBOR economics with data from Brazil’s Central Bank. Source: HARBOR economics with data from Brazil’s Central Bank and the IBGE.
Although inflation has probably already reached its annual peak (see graph 30), HARBOR and several analysts
estimate that the Brazilian economy will weaken towards Dec. 2022 and in 2023 due to high interest rates...
Q2 2022 GDP was mainly driven by the recovery in employment and Graph 30. Inflation expectations in Brazil
higher household disposable income following the stimulus provided in Annual % growth
Annual Expected inflation
2020 and 2021. However, Santander anticipates that the negative effects 14.0 Objective Upper limit
of higher interest rates will most likely start to manifest around Q4 2022. 12.5 Lower limit
11.0
9.5
Along the same lines, by 2023 HARBOR and various analysts estimate 8.0
that the economy will be weighed down by high interest rates that limit 6.5
5.0
the demand for credit, as well as the effects of high inflation on 3.5
household income. 2.0
Dec-20 Dec-21 Dec-22 Dec-23
Source: HARBOR economics with data from Brazil’s Central Bank and the IBGE.
...which, together with the uncertainty regarding the October 2022 presidential elections, will weigh on private
investment in 2023.
Looking ahead to the October 2022 presidential elections, at Graph 31. Brazil electoral preferences
HARBOR we estimate that Lula is most likely to win the elections % of preference
(see graph 31). However, we do not rule out that Bolsonaro could secure Bolsonaro Lula
his reelection amid better-than-expected economic performance. In this
BTG/FSB 34
sense, at HARBOR we estimate that uncertainty will persist 45
throughout 2023. On the one hand, a Lula victory would most likely 32
Ipec
imply higher fiscal spending due to the possible return of Electrobras 44
to state ownership and greater government involvement in the Brazilian 33
economy. Additionally, there is a lack of clarity as to whether Bolsonaro Genial/Quaest 45
would accept the election results if they do not favor him. In turn, a
Bolsonaro victory would continue to limit investment given his 0 10 20 30 40 50
lack of respect for the Rule of Law. Source: HARBOR economics with information from Bloomberg and the pollsters
(August 2022).
HARBOR economics · Economic Outlook SEPTEMBER 2022

9
Chile
During January-June 2022, the economy expanded by 6.3% annual average (see graph 32) due to the high
liquidity of consumers as a result of the stimulus granted, which also boosted inflation (see graph 33) ...
Graph 32. Chile’s IMACEC Graph 33. Inflation vs. money available in Chile
Annual % growth Annual % growth Annual % growth
30 General 25.1 15 Inflation 80
Good's production
Money available*
20 Trade 60
Services 12.2 10
8.8 7.6 40
10 6.3 4.1
3.4 5 20
0 0
-3.3 -2.1 0
-10 -7.7
-20
-8.7
-12.5 -5 -40
-20
Jul-02 Jul-07 Jul-12 Jul-17 Jul-22
2020 2021 2022 Source: HARBOR economics with data from Chile’s Central Bank.
Source: HARBOR economics with data from Chile’s Central Bank. *Refers to the M1 (Banknotes and coins in public hands). 12 months in advance.
...however, at HARBOR we anticipate that the Chilean GDP will tend to decelerate in the second half of the
year and during 2023 amid a higher unemployment (7.8% June 2022 vs. 7.3% January 2022) due to a fall in the
mining sector, higher interest rates (see graph 34) and the uncertainty surrounding the new constitution.
Graph 34. Interest rate expectations to Dec. 2022
At HARBOR we anticipate that the new Chilean constitution will
most likely not be approved, however, we do not rule out that due to
in Chile % of answers (vs. 9.75% current rate)
40 3 6 .4
a high level of undecided voters (15% according to the Pulso Ciudadano
2 7 .3
survey) it could be approved at the last moment. In this sense, we 30
estimate that, if it is not approved, the most likely scenario is that
20 1 4 .5
the government will seek to promote another mechanism to
replace and/or modify the current constitution. If this scenario 10 5 .5 7 .3 7 .3
1 .8
occurs, investment will be hindered during 2023 due to the high
0
regulatory uncertainty that will persist in Chile, as well as the high
<10.25 10.5 10.75 11.00 11.25 11.5 >11.75
interest rates. Source: HARBOR economics with data from Chile’s Central Bank.
Colombia
During the second quarter, Colombia's GDP had an annual growth of 12.6%, due mainly to exports and
consumption (see graph 35) . . .
Graph 35. Demand side Colombian GDP Graph 36. Inflation in Colombia
Annual % avg. growth Annual growth (%)
Private consumption Public consumpt ion
11.5
GFFC* Exports
Imports GDP
40
9.5
30
20 7.5
13.7 12.6
10.8
10 8.6
5.5
0
III IV I II
3.5
2021 2022 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22
Source: HARBOR economics with DANE’s information. | *Gross Formation of Fixed Capital.
Source: HARBOR economics with DANE’s information.
...however, during the second semester, GDP will deaccelerate because of the weakening of consumption and
investment, and high inflation continues.
During July Colombia's CPI expanded 10.2% YoY (see graph 36) because of increases in the prices of clothing and shoes (due
to the back-to-school season), as well as prices of food and beverages. Due to the latter, the Central Bank raised its 2022
inflation forecast during August from 7.1% to 9.7%, and for 2023 from 4.8% to 5.7%.
Despite this, it is highly likely that the central bank will moderate rate hikes. Leonardo Villar, general manager of the Colombia
Republic's Bank, has stated that "any possibility of an adjustment in the interest rate would seem to be of a lower
magnitude than those we have seen, but it is impossible to compromise ourselves on the finishing point." Juan Espinosa,
leader of Bancolombia's researchers, believes that this would obey, in part, to the fact that "some signals of moderation
that the Colombian economy have started to show." Since May 2022, the seasonally-adjusted employed series has contracted,
and in July 2022, purchases by card holders, which are a trustworthy thermometer on the state of aggregate activity, showed less
growth. So "If the indicators which we will know in the following days point in the same direction, the board of the Republic's Bank
could moderate its fastest and most accentuated hikes in the rate of intervention [interest rate] in recent history".

On the other hand, the new tax reform keeps uncertainty high in Colombia.
The reform proposes to increase tax collection with limits the benefits of those who generate a monthly income greater than $10
million Colombian pesos, eliminate corporate tax benefits, tax crude oil, coal and gold exports, as well as sugary beverages and
ultra-processed foods. Fitch Ratings has recently warned about the harmful effects that this reform could bring, among
which a weaker long-term credit profile stands out. However, the rating agency estimates that it is unlikely that the
reform will be approved without modifications, and the Colombian president, Gustavo Petro, has already shown himself
open to dialogue in this regard.
Peru
Peru's GDP grew 3.3% YoY during the second quarter of 2022. This was mainly driven by consumption and
exports (see graph 37)....
Graph 37. Peru's demand-side GDP Graph 38. 3-month economic expectations index
Annual % avg. growth Points
30 Prv. consumption Gov. Consumption 44.5
25 25 44
GFI* Exports 42.9 42.5
25
Imports GDP 42
20
15 40
15 12 11.9 40.1
12 10 10 39.0
10 7 38
5 7 7
5
6
3.5 3.8 5 4 3.3 36
2
1 34.3
0 34
-1 33.6
-5 -3 -3 -3 32
Q3 Q4 Q1 Q2
30
2021 2022 Aug-21 Nov-21 Feb-22 May-22 Aug-22
Source: HARBOR economics with information from Peru’s Central Bank. | *Gross Fixed Source: HARBOR economics with information from Peru’s Central Bank.
Investment.
...despite high inflation and persistent distrust in the business sector (see graph 38).
For what remains of 2022 and in 2023, at HARBOR we estimate that GDP will be boosted by additional pension withdrawals,
the upcoming start of production at the Quellaveco copper mine, and an increase in tourism. However, there are also
downside risks, including lower investment dynamism in infrastructure and mining. The latter as the mining sector has been
constrained by many strikes to improve labor conditions. Going forward, HARBOR believes that this, coupled with increasing political
instability, will limit investment in the sector.
During July 2022, inflation rose 8.7% YoY, driven by significant increases in international food and fuel prices. Although this figure
represents a slight deceleration with respect to June (8.8% YoY), the Central Bank of Peru increased its interest rate by 50 basis points
during August, to 6.5%, as inflation is still far from the 1-3% target range. The agency reiterated its forecast that inflation will be
located in that range during the second half of 2023, however, although at HARBOR we estimate that inflation will
decelerate during 2023, we anticipate that it will reach the target range until Dec. 2023. This is due to continued upward
pressures on food and fuel prices. On the political front, uncertainty continues due to the constant ministerial changes in Pedro
Castillo's cabinet. INFOBAE revealed that 44% of the current ministers are under investigation for alleged crimes.
Venezuela
Venezuela's economy grew during the first quarter of 2022, while inflation decelerated at a monthly rate.
The Central Bank of Venezuela confirmed that the economy expanded 17.4% YoY in Q1 2022. Such data is the first official
figure published since the first quarter of 2019. Growth projections for the Venezuelan economy this year are not uniform. CEPAL,
for example, estimates a 10% YoY average growth, while the IMF forecasts a 1.5% annual increase. Some analysts warn that the
recovery of the Venezuelan GDP will be asymmetric, meaning that some sectors will grow while others will stagnate or even
continue to contract. On the other hand, the recovery may not be sustainable, as it has been largely driven by the increase in oil
prices following the conflict between Ukraine and Russia. In this sense, a drop in oil prices could limit the recovery of
Venezuela's GDP.
Regarding inflation, the Central Bank stated that in July the CPI grew 7.5% MoM, which represents a deceleration with respect to
the previous month. This amid the application of orthodox policies by the government, such as maintaining the stability of the
exchange rate, and limitations to credit and public spending. In addition, the government of Nicolás Maduro has initiated dialogues
with the private sector in order to find less-authoritarian ways than in the past to keep prices of a variety of commodities low.

MX – MACROECONOMIC BASE SCENARIO
ANNUAL 2021 – 2027
(Probability 50%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7

REAL G DP _ 1/
% Growth 4.8 1. 8 1. 0 0.8 1. 2 1. 9 2.6 2.1 1. 7
INDUS TRIAL P RO DUCTIO N _ 2 /
Average % Growth 6.7 3.2 0.4 0.1 1. 2 0.4 1. 6 2.3 1. 0
RETAIL S ALES _ 3 /
Average % Growth 7.7 3.5 0.8 1. 1 1. 8 2.8 3.8 3.0 2.3
INFLATIO N
Dec- Dec % Growth 7.4 7.9 4.7 3.8 5.5 4.0 5.2 4.0 4.4
Average % Growth 5.7 7.9 5.6 4.4 6.0 3.7 4.4 4.1 4.5
FO RMAL EMP LO Y MENT_ 4 /
Annual increase in IMSS insured by Dec. 834,066 470,402 93,378 329,444 297,741 535,804 595,936 703,742 4 5 1, 6 6 1
Average annual change 382,024 7 7 1, 7 2 2 2 5 6 , 18 4 242,532 423,480 3 8 8 , 2 11 553,022 523,802 392,750
Average % annual Growth 1.9 3.8 1. 2 1. 2 2.1 1. 8 2.5 2.4 1. 8
AV ERAG E REAL S ALARIES _ 5 /
Average % Growth 1.4 2.4 0.3 0.4 1. 0 0.6 0.2 0.9 0.5
AV ERAG E NO MINAL S ALARIES _ 6 /
Average % Growth 7.2 10 . 4 6.0 4.9 7.1 4.3 4.6 5.0 5.0
2 8 DAY S CETES
Nominal Simple Rate_7/ 4.4 7.6 9.6 8.5 8.6 5.9 5.6 5.7 7.0
Nominal Compound Rate_8/ 4.5 7.9 10 . 1 8.8 8.9 6.1 5.7 5.8 7.3
Real Compound Rate_9/ - 2.6 0.0 5.2 4.8 3.3 2.0 0.4 1. 8 2.8
TIIE
Nominal Simple Rate 4.6 7.8 9.9 8.8 8.8 6.3 5.8 6.0 7.3
Nominal Compound Rate 4.7 8.1 10 . 3 9.2 9.2 6.4 6.0 6.2 7.6
Real Compound Rate - 2.5 0.1 5.4 5.1 3.6 2.3 0.7 2.1 3.1
NO MINAL WAG E BILL _ 10 /
Average % Growth 9.3 14 . 7 7.3 6.1 9.3 6.2 7.3 7.5 6.9
REAL WAG E BILL
Average % Growth 3.4 6.3 1. 6 1. 6 3.1 2.4 2.8 3.3 2.3
IG AE _ 11/
Average % Growth 4.8 1. 8 1. 0 0.8 1. 2 2.0 2.6 2.1 1. 7
G RO S S FIX ED INV ES TMENT _ 12 /
Average % Growth 9.5 4.9 - 1. 4 - 1. 7 0.6 1. 5 4.4 1. 3 0.8
EX CHANG E RATE ($ / e uro)
End Of The Year
Interbank 48 hrs. Spot 23.18 20.46 22.81 23.82 22.36 24.48 25.53 25.86 24.50
Nominal % change - 5.3 - 11. 7 11. 5 4.4 1. 4 2.8 4.3 1. 3 4.9
Year Average
Interbank 48 hrs. Spot 23.99 2 1. 3 7 2 1. 2 4 23.86 2 2 . 16 24.36 25.86 26.40 24.34
Nominal % change - 2.1 - 10 . 9 - 0.6 12 . 3 0.3 2.1 6.2 2.1 4.4
EX CHANG E RATE ($ / dolla r)
End Of The Year
Interbank 48 hrs. Spot 20.46 20.73 2 1. 4 6 2 1. 6 9 2 1. 2 9 22.73 2 1. 9 6 2 1. 6 5 2 1. 9 0
Nominal % change 2.6 1. 3 3.5 1. 1 2.0 4.8 - 3.4 - 1. 4 0.9
Year Average
Interbank 48 hrs. Spot 20.28 20.40 2 1. 0 4 2 1. 8 1 2 1. 0 8 22.71 22.95 2 2 . 18 2 2 . 14
Nominal % change - 5.6 0.6 3.1 3.7 2.5 4.1 1. 1 - 3.4 1. 7

12
MX – MACROECONOMIC BASE SCENARIO
ANNUAL 2021 – 2027
(Probability 50%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2026 2 3 - '2 7

FO REIG N DIRECT INV ES TMENT _ 13 /
Millions of dollars 28,712 30,488 29,925 3 0 , 5 11 30,308 3 1, 2 8 4 32,644 36,088 32,090
Average % Growth 2.1 6.2 - 1. 8 2.0 2.1 2.5 4.3 10 . 6 3.5
REMITTANCES _ 14 /
Average % Growth 27.0 11. 1 1. 1 0.3 4.1 3.3 4.5 3.6 2.6
TO TAL EX P O RTS _ 15 /
Average % Growth 18.6 19 . 2 4.3 - 0.4 7.7 3.2 5.3 4.5 3.4
EX P O RTS (NO N P ETRO LEUM) _ 16 /
Average % Growth 16.5 16 . 9 3.0 - 1. 4 6.2 4.0 5.2 4.1 3.0
EX P O RTS (P ETRO LEUM) _ 17 /
Average % Growth 65.5 55.9 18 . 8 10 . 4 28.4 - 4.5 5.8 8.1 7.7
TO TAL IMP O RTS _ 18 /
Average % Growth 32.0 20.2 4.3 - 0.3 8.1 2.9 4.7 4.6 3.2
TRADE BALANCE _ 19 /
Millions of dollars - 10,939 - 17 , 8 5 4 - 18 , 9 4 7 - 19 , 3 4 9 - 18 , 7 17 - 18 , 4 2 3 - 15 , 9 18 - 17 , 3 7 6 - 18 , 0 0 2
CURRENT ACCO UNT _ 2 0 /
GDP Million of dollars - 17,165 - 20,594 - 27,884 - 28,024 - 25,500 - 25,552 - 22,755 - 23,895 - 25,622

13
MX – MACROECONOMIC UNFAVORABLE SCENARIO
ANNUAL 2021 – 2027
(Probability 40%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7

REAL G DP _ 1/
% Growth 4.8 1. 2 - 0.4 - 1. 5 - 0.2 0.5 1. 5 1. 7 0.4
Average % Growth 6.7 2.8 - 1. 6 - 1. 3 0.0 0.4 1. 4 1. 8 0.1
RETAIL S ALES _ 3 /
Average % Growth 7.7 2.8 - 0.9 - 2.0 - 0.1 0.7 2.1 2.5 0.5
INFLATIO N
Dec- Dec % Growth 7.4 8.8 5.4 3.6 6.0 5.1 5.0 3.9 4.6
Average % Growth 5.7 8.1 6.8 4.8 6.6 4.6 5.8 4.4 5.3
Annual increase in IMSS insured by Dec. 834,066 3 13 , 8 3 8 - 220,901 10 3 , 14 4 65,361 16 7 , 7 2 2 4 6 0 , 8 15 528,463 207,849
Average annual change 382,024 736,001 - 9 7 , 15 6 17 3 , 2 2 4 270,690 204,493 4 5 0 , 9 17 438,484 233,992
Average % annual Growth 1.9 3.7 - 0.5 0.8 1. 3 1. 0 2.1 2.0 1. 1
Average % Growth 1.4 1. 7 - 1. 0 - 0.7 0.0 0.2 0.0 0.3 - 0.2
Average % Growth 7.2 9.9 5.8 4.1 6.6 4.8 5.8 4.7 5.0
2 8 DAY S CETES
Nominal Simple Rate_7/ 4.4 7.7 10 . 1 8.7 8.8 6.8 7.0 8.2 8.2
Nominal Compound Rate _8/ 4.5 8.0 10 . 5 9.1 9.2 7.0 7.2 8.6 8.5
Real Compound Rate _9/ - 2.6 - 0.8 4.8 5.3 3.1 1. 8 2.2 4.5 3.7
TIIE
Nominal Simple Rate 4.6 7.9 10 . 3 9.0 9.1 7.0 7.3 8.6 8.4
Nominal Compound Rate 4.7 8.2 10 . 8 9.4 9.5 7.3 7.5 8.9 8.8
Real Compound Rate - 2.5 - 0.6 5.1 5.6 3.4 2.1 2.5 4.8 4.0
Average % Growth 9.3 13 . 9 5.3 5.0 8.1 5.8 8.1 6.8 6.2
REAL WAG E BILL
Average % Growth 3.4 5.5 - 1. 4 0.2 1. 4 1. 1 2.2 2.4 0.9
IG AE _ 11/
Average % Growth 4.8 1. 2 - 0.4 - 1. 5 - 0.2 0.5 1. 5 1. 7 0.4
Average % Growth 9.5 4.0 - 3.3 - 3.0 - 0.8 - 2.4 2.6 0.7 - 1. 1
End Of The Year
Nominal % change - 5.3 - 11. 7 13 . 6 9.0 3.6 6.6 8.1 6.0 8.7
Year Average
Interbank 48 hrs. Spot 23.99 2 1. 4 3 2 1. 8 2 24.54 22.60 26.75 28.26 28.05 25.88
Nominal % change - 2.1 - 10 . 7 1. 8 12 . 5 1. 2 9.0 5.7 - 0.8 5.6
End Of The Year
Interbank 48 hrs. Spot 20.46 2 1. 8 8 23.44 25.21 23.51 26.61 26.52 26.23 25.60
Nominal % change 2.6 6.9 7.1 7.6 7.2 5.5 - 0.3 - 1. 1 3.8
Year Average
Nominal % change - 5.6 1. 8 11. 5 5.3 6.2 8.3 2.0 - 1. 8 5.0

14
MX – MACROECONOMIC UNFAVORABLE SCENARIO
ANNUAL 2021 – 2027
(Probability 40%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7
Millions of dollars 28,712 28,409 2 7 , 15 5 26,985 2 7 , 5 16 27,441 28,036 29,261 27,775
Average % Growth 2.1 - 1. 1 - 4.4 - 0.6 - 2.0 1. 7 2.2 4.4 0.6
REMITTANCES _ 14 /
Average % Growth 27.0 9.8 - 2.9 - 1. 2 1. 9 2.1 3.6 3.1 0.9
Average % Growth 18.6 16 . 2 0.1 - 1. 4 5.0 0.8 4.6 4.1 1. 6
Average % Growth 16.5 14 . 5 - 1. 0 - 2.2 3.7 1. 4 4.6 3.9 1. 3
Average % Growth 65.5 42.7 14 . 4 8.2 2 1. 8 - 5.5 4.9 6.3 5.7
Average % Growth 32.0 17 . 2 3.2 - 2.2 6.1 0.4 4.0 3.8 1. 8
Millions of dollars - 11,058 - 18 , 3 0 8 - 36,766 - 3 0 , 9 13 - 28,662 - 28,876 - 26,281 - 25,424 - 29,652
GDP Million of dollars - 17,165 - 23,583 - 49,397 - 39,969 - 37,649 - 3 5 , 15 6 - 3 2 , 15 5 - 3 1, 8 5 5 - 37,706

15
MX – MACROECONOMIC FAVORABLE SCENARIO
ANNUAL 2021 – 2027
(Probability 10%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2026 2 3 - '2 7
REAL G DP _ 1/
% Growth 4.8 2.2 1. 9 1. 3 1. 8 2.1 2.8 2.3 2.1
Average % Growth 6.7 3.5 2.6 1. 3 2.5 0.7 2.1 2.7 1. 9
RETAIL S ALES _ 3 /
Average % Growth 7.7 4.2 2.1 1. 9 2.7 3.0 4.1 3.4 2.9
INFLATIO N
Dec- Dec % Growth 7.4 7.2 4.2 3.0 4.8 3.3 3.8 3.5 3.6
Average % Growth 5.7 7.7 4.7 3.6 5.3 3.3 4.1 3.3 3.8
Annual increase in IMSS insured by Dec. 834,066 576,062 457,604 4 7 3 , 2 10 502,292 670,791 657,282 7 8 3 , 7 17 608,521
Average annual change 382,024 802,742 496,774 404,584 568,033 4 9 7 , 3 12 693,642 7 0 5 , 18 8 559,500
Average % annual Growth 1.9 4.0 2.4 1. 9 2.8 2.3 3.1 3.1 2.5
Average % Growth 1.4 2.7 2.0 1. 3 2.0 1. 4 0.3 1. 1 1. 2
Average % Growth 7.2 10 . 6 6.8 5.0 7.5 4.8 4.4 4.5 5.1
2 8 DAY S CETES
Nominal Simple Rate_7/ 4.4 7.5 9.3 6.6 7.8 4.7 4.8 5.1 6.1
Nominal Compound Rate _8/ 4.5 7.8 9.7 6.8 8.1 4.8 4.9 5.3 6.3
Real Compound Rate _9/ - 2.6 0.6 5.3 3.7 3.2 1. 5 1. 0 1. 7 2.6
TIIE
Nominal Simple Rate 4.6 7.8 9.5 6.8 8.0 5.0 5.0 5.4 6.3
Nominal Compound Rate 4.7 8.0 9.9 7.1 8.3 5.1 5.1 5.6 6.5
Real Compound Rate - 2.5 0.8 5.5 4.0 3.4 1. 8 1. 2 2.0 2.9
Average % Growth 9.3 15 . 1 9.4 7.0 10 . 5 7.2 7.6 7.7 7.8
REAL WAG E BILL
Average % Growth 3.4 6.9 4.5 3.2 4.8 3.7 3.4 4.2 3.8
IG AE _ 11/
Average % Growth 4.8 2.2 1. 9 1. 3 1. 8 2.1 2.8 2.3 2.1
Average % Growth 9.4 5.6 0.1 - 0.9 1. 6 1. 7 5.1 1. 6 1. 5
End Of The Year
Nominal % change - 5.3 - 9.8 8.0 6.9 1. 7 3.2 5.2 5.4 5.7
Year Average
Interbank 48 hrs. Spot 23.99 2 1. 4 2 1. 7 24.0 22.4 24.7 26.1 26.1 24.5
Nominal % change - 2.1 - 10 . 7 1. 5 10 . 3 0.4 2.9 5.7 0.2 4.1
End Of The Year
Interbank 48 hrs. Spot 20.46 19 . 4 19 . 8 20.0 19 . 7 20.3 20.8 20.8 20.3
Nominal % change 2.6 - 5.4 2.4 0.9 - 0.7 1. 3 2.8 0.0 1. 5
Year Average
Interbank 48 hrs. Spot 20.28 20.0 19 . 6 20.0 19 . 9 20.2 20.6 20.9 20.2
Nominal % change - 5.6 - 1. 3 - 2.1 2.0 - 0.5 0.9 1. 9 1. 4 0.8

16
MX – MACROECONOMIC FAVORABLE SCENARIO
ANNUAL 2021 – 2027
(Probability 10%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2026 2 3 - '2 7

Millions of dollars 28,712 3 1, 6 10 32,076 3 2 , 8 16 3 2 , 16 8 33,994 35,723 39,803 34,883
Average % Growth 2.1 10 . 1 1. 5 2.3 4.6 3.6 5.1 11. 4 4.8
REMITTANCES _ 14 /
Average % Growth 27.0 14 . 7 2.4 1. 2 6.1 2.9 5.1 3.9 3.1
Average % Growth 18.6 24.6 7.4 2.4 11. 5 4.3 5.5 4.7 4.8
Average % Growth 16.5 22.0 6.1 1. 5 9.9 4.6 5.4 4.3 4.4
Average % Growth 65.5 65.9 22.1 11. 4 33.1 0.6 6.3 8.6 9.8
Average % Growth 32.0 23.8 7.8 2.0 11. 2 3.8 5.2 4.8 4.7
Millions of dollars - 10,939 - 9,534 - 12 , 9 6 0 - 10 , 9 0 1 - 11, 13 2 - 8,555 - 6,631 - 8,055 - 9,420
GDP Million of dollars - 17,165 - 13 , 7 7 5 - 22,245 - 18 , 6 0 8 - 18 , 2 0 9 - 15 , 2 8 1 - 12 , 0 5 3 - 13 , 6 3 3 - 16 , 3 6 4

17
US – MACROECONOMIC SCENARIO
ANNUAL 2021 – 2027
BASE SCENARIO
(Probability 50%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7
US G DP
% Growth 5.7 1. 7 0.5 1. 2 1. 1 1. 8 2.0 1. 9 1. 5
US INDUS TRIAL P RO DUCTIO N
% Growth 4.9 4.2 0.6 - 1. 3 1. 2 0.4 2.5 2.6 1. 0
US INFLATIO N
Dec- Dec % Growth 7.1 8.0 2.5 2.2 4.2 2.3 2.6 2.5 2.4
Average % Growth 4.7 8.3 4.4 2.5 5.1 2.3 2.6 2.5 2.9
FED INTERES T RATE
Nominal Simple Rate 0.3 1. 9 4.1 2.6 2.9 1. 8 1. 9 2.6 2.6
Compound Nominal Rate 0.3 1. 9 4.1 2.7 2.9 1. 8 1. 9 2.6 2.6
Real Compound Rate in US - 6.4 - 5.6 1. 6 0.4 - 1. 2 - 0.5 - 0.6 0.1 0.2
S O FR INTERES T RATE
Real Compound Rate in US - 6.6 - 6.1 0.9 - 0.1 - 1. 9 - 0.9 - 0.9 - 0.5 - 0.3
EX CHANG E RATE (dolla r/ e uro)
End of the Period
Interbank 1.13 0.98 1. 0 6 1. 10 1. 0 5 1. 0 6 1. 14 1. 18 1. 11
Nominal % Change - 7.7 - 13 . 3 8.2 3.4 - 0.6 - 3.2 7.4 3.7 3.9
Average of the Period
Interbank 1.18 1. 0 5 1. 0 1 1. 0 9 1. 0 5 1. 0 7 1. 13 1. 19 1. 10
Nominal % Change 3.7 - 11. 5 - 3.7 8.4 - 2.2 - 2.0 5.0 5.6 2.7
UNFAVORABLE SCENARIO
(Probabilidad 40%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7
US G DP
% Growth 5.7 1. 1 - 0.6 0.8 0.4 1. 3 1. 7 1. 6 1. 0
% Growth 4.9 3.9 - 1. 7 - 2.7 - 0.2 0.7 2.2 2.2 0.1
US INFLATIO N
Dec- Dec % Growth 7.1 8.9 3.2 3.3 5.1 2.9 2.8 3.3 3.1
Average % Growth 4.7 8.5 5.5 3.1 5.7 3.0 2.8 3.3 3.5
FED INTERES T RATE
Nominal Simple Rate 0.3 2.0 4.0 2.2 2.7 1. 3 1. 5 2.5 2.3
Compound Nominal Rate 0.3 2.0 4.1 2.2 2.8 1. 3 1. 5 2.5 2.3
Real Compound Rate in US - 6.4 - 6.3 0.8 - 1. 1 - 2.2 - 1. 6 - 1. 3 - 0.8 - 0.8
Nominal Simple Rate 0.0 1. 5 3.3 1. 7 2.1 0.9 1. 2 2.0 1. 8
Compound Nominal Rate 0.0 1. 5 3.3 1. 7 2.2 0.9 1. 2 2.1 1. 8
Real Compound Rate in US - 6.6 - 6.8 0.1 - 1. 6 - 2.8 - 2.0 - 1. 6 - 1. 2 - 1. 2
End of the Period
Interbank 1.13 0.94 0.99 1. 0 1 0.98 1. 0 2 1. 0 5 1. 0 6 1. 0 2
Nominal % Change - 7.7 - 17 . 4 6.1 1. 3 - 3.3 1. 0 3.2 1. 0 2.5
Interbank 1.18 1. 0 4 0.95 1. 0 1 1. 0 0 1. 0 2 1. 0 6 1. 0 7 1. 0 2
3.7 - 12 . 2 - 8.9 6.9 - 4.7 0.6 3.6 1. 1 0.7
Nominal % Change

18
US – MACROECONOMIC SCENARIO
ANNUAL 2021 – 2027
FAVORABLE SCENARIO
(Probabilidad 10%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7
US G DP
% Growth 5.7 2.0 1. 5 1. 8 1. 8 2.0 2.4 2.2 2.0
% Growth 4.9 4.5 3.0 0.2 2.6 0.5 2.9 2.8 1. 9
US INFLATIO N
Dec- Dec % Growth 7.1 6.9 2.1 2.2 3.7 2.0 2.3 2.1 2.1
Average % Growth 4.7 7.8 3.0 2.2 4.3 2.0 2.3 2.6 2.4
FED INTERES T RATE
Real Compound Rate in US - 6.4 - 4.7 1. 5 - 0.1 - 1. 1 - 0.2 - 0.4 0.2 0.2
Nominal Simple Rate 0.0 1. 3 2.8 1. 6 1. 9 1. 4 1. 6 1. 7 1. 8
Compound Nominal Rate 0.0 1. 3 2.9 1. 6 1. 9 1. 4 1. 6 1. 7 1. 8
Real Compound Rate in US - 6.6 - 5.2 0.7 - 0.5 - 1. 7 - 0.6 - 0.7 - 0.4 - 0.3
End of the Period
Interbank 1.13 1. 0 8 1. 14 1. 2 1 1. 14 1. 2 3 1. 2 6 1. 2 4 1. 2 2
Nominal % Change - 7.7 - 4.6 5.4 5.9 2.2 1. 8 2.7 - 1. 4 2.9

Interbank 1.18 1. 0 7 1. 11 1. 2 0 1. 13 1. 2 2 1. 2 7 1. 2 5 1. 2 1
Nominal % Change 3.7 - 9.6 3.7 8.1 0.7 2.0 3.7 - 1. 3 3.3

19
GLOBAL – MACROECONOMIC BASE SCENARIO
ANNUAL 2021 – 2027
(Probability 50%)
2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7

WO RLD REAL G DP
% Growth 6.1 2.9 2.6 3.1 2.9 3.4 3.3 3.3 3.1
EURO P EAN UNIO N REAL G DP
% Growth 5.4 2.6 1. 3 1. 8 1. 9 1. 9 1. 8 1. 7 1. 7
EURO ZO NE REAL G DP
% Growth 5.3 2.5 0.9 1. 9 1. 8 1. 6 1. 5 1. 3 1. 4
G ERMANY REAL G DP
% Growth 2.8 1. 2 2.9 1. 2 1. 8 1. 5 1. 2 1. 1 1. 6
S P AIN REAL G DP
% Growth 5.1 4.4 3.3 2.0 3.2 2.0 1. 7 1. 6 2.1
FRANCE REAL G DP
% Growth 7.0 3.2 1. 4 1. 5 2.0 1. 4 1. 4 1. 4 1. 4
G REECE REAL G DP
% Growth 8.3 3.5 2.6 2.0 2.7 1. 6 1. 4 1. 2 1. 8
IRELAND REAL G DP
% Growth 13.5 5.2 5.0 4.0 4.7 3.0 3.0 3.0 3.6
ITALY REAL G DP
% Growth 6.6 2.6 1. 7 1. 3 1. 8 1. 2 1. 0 0.5 1. 1
P O RTUG AL REAL G DP
% Growth 4.9 4.0 2.1 2.4 2.8 2.2 1. 9 1. 9 2.1
UNITED KING DO M REAL G DP
% Growth 7.4 3.5 1. 2 1. 5 2.0 2.2 1. 8 1. 5 1. 6
CHINA REAL G DP
% Growth 8.1 3.0 4.6 4.9 4.2 4.6 4.4 4.8 4.7
INDIA REAL G DP
% Growth 8.9 7.2 5.8 6.3 6.4 7.0 6.5 6.2 6.4
JAP AN REAL G DP
% Growth 1.6 1. 8 1. 6 0.8 1. 4 0.7 0.5 0.4 0.8
RUS S IA
% Growth 4.7 - 9.5 - 3.0 1. 8 - 3.6 1. 0 0.8 0.7 0.3
S O UTH AFRICA REAL G DP
% Growth 4.9 1. 9 1. 4 1. 4 1. 6 1. 4 1. 4 1. 4 1. 4
LATIN AMERICA REAL G DP
% Growth 6.8 2.4 1. 4 1. 6 1. 8 2.1 2.3 2.2 1. 9
ARG ENTINA REAL G DP
% Growth 10.2 3.2 1. 5 1. 5 2.1 1. 7 1. 8 1. 9 1. 7
BRAZIL REAL G DP
% Growth 4.6 1. 7 0.9 1. 5 1. 4 2.0 2.0 2.0 1. 7
CHILE REAL G DP
% Growth 12.0 1. 9 0.3 1. 7 1. 3 2.1 2.0 2.0 1. 6
CO LO MBIA REAL G DP
% Growth 10.6 6.8 2.7 3.1 4.2 3.0 3.3 3.0 3.0
P ERU REAL G DP
% Growth 13.3 2.5 2.7 2.9 2.7 3.0 3.1 3.0 2.9
V ENEZUELA REAL G DP
% Growth - 1.5 1. 5 1. 5 n/ a 1. 5 n/ a n/ a n/ a 1. 5

20

Economic Outlook: Executive Summary

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Economic Outlook: Executive Summary

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Economic

World Graph 1. Global real disposable income

According to Fitch Ratings, the global economy is likely to contract in

increased (see graph 4). In this regard, Kishida will implement 1

additional support for food, energy and economic regions. 0

HARBOR economics · Economic Outlook SEPTEMBER 2022 3

HARBOR economics · Economic Outlook SEPTEMBER 2022 4

Source: Daily Shot.

HARBOR economics · Economic Outlook SEPTEMBER 2022 6

may be announced, or requested, the 3 or 5

July 20 August 23 October 3rd* November 3rd* May 1,2023*

50 48.5 50.3 5.3 5.1

HARBOR economics · Economic Outlook SEPTEMBER 2022 8

governability in Argentina. On one hand, the trial of the vice-president 4.1

HARBOR economics · Economic Outlook SEPTEMBER 2022

HARBOR economics · Economic Outlook SEPTEMBER 2022 10

HARBOR economics · Economic Outlook SEPTEMBER 2022 11

2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7

HARBOR economics · Economic Outlook SEPTEMBER 2022

2021 2022 2023 2024 2 2 - '2 4 2025 2026 2026 2 3 - '2 7

HARBOR economics · Economic Outlook SEPTEMBER 2022

2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7

HARBOR economics · Economic Outlook SEPTEMBER 2022

HARBOR economics · Economic Outlook SEPTEMBER 2022

HARBOR economics · Economic Outlook SEPTEMBER 2022

2021 2022 2023 2024 2 2 - '2 4 2025 2026 2026 2 3 - '2 7

HARBOR economics · Economic Outlook SEPTEMBER 2022

HARBOR economics · Economic Outlook SEPTEMBER 2022

Average of the Period

HARBOR economics · Economic Outlook SEPTEMBER 2022

2021 2022 2023 2024 2 2 - '2 4 2025 2026 2027 2 3 - '2 7

HARBOR economics · Economic Outlook SEPTEMBER 2022

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