Signs of slowing economic activity and rising inflationary pressures persist
The economic policy environment is particularly challenging, given 2025’s 2.1% growth rate, and December and January y/y inflation at close to the upper limit of the 3%-5% target range. This situation leads to a monetary policy stance that seeks to avoid generating inflationary pressures, while also being expected to support greater economic dynamism.
While bank interest rates have been declining, credit to the private sector has continued to grow at relatively low rates over the past decade, outside of the pandemic period.
The external sector performed well in January, driven by higher gold exports, lower oil imports and modest expansion of other imports, amid weaker domestic economic activity.
The local peso appreciated in January from December, although it depreciated by 2.98% on a y/y basis. Net international reserves declined by $0.7 billion, though still total close to $14 billion.
The central government began 2026 budget execution cautiously, expanding primary spending by 3.2% y/y in January, significantly below the 9.5% revenue increase. SPNF debt closed at $61.6 billion, up $3.96 billion (6.9%) relative to 2025.
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