Mexico, AI supply chains & fiscal slippage

Data released over the past week provide growing evidence that Mexico’s industrial sector is benefiting from integration into AI supply chains. But this is being offset by weakness in the rest of the economy. And while the government’s 2027 Economic Package submitted to congress this week points to a fading drag from fiscal austerity, it adds to reasons to think that Banxico will tighten monetary policy. Next week, the main event is an interest rate decision in Brazil where, despite the recent rise in oil prices, Copom looks set to opt for another 25bp rate cut, to 13.75%.