(Expansion) – Bad omens are not only unleashed; they want to materialize and generate more volatile and raw environments. The United States caresses the economic recession, while the mood of investors and economists paints a gloomy horizon with its inevitable multiplier effects throughout the world, including Mexico.
Nouriel Roubini, better known as Dr. Doom (for his dire economic predictions), warns that the recession is a fait accompli: “There are many reasons why we are going to have a severe recession and a financial and debt crisis,” said the last Monday in the heat of an interview with Bloomberg TV. “The idea that this is going to be short and perfunctory is totally delusional.”
He has not been the only doomsayer of the disaster. Ray Dalio, founder of Bridgewater, one of the largest hedge funds in the world, and the billionaire Warren Buffett, agree with Roubini and maintain that the public debt of the United States is impressive and will be the trigger for the economic recession. Larry Fink, the head of BlackRock, recommends not investing in the stock market for a year.
Thus, there are those who assure that the United States is already in a technical recession, while the consensus maintains that it is not yet in a recession but is running towards it. The bitter cocktail is already on the table: wholesale and retail sales indicators are going down, industrial production too; high inflation is increasingly reducing the purchasing power of the population.
Under this scenario, the US economy is expected to enter a recession at the end of 2022. Although there are those who say it will be very short, it will not be a picnic either, so you have to be prepared for it.
How long can a recession last? “Until May 2023”, responds bluntly Gabriela Siller, director of Economic Analysis of Grupo Financiero Base. “There is no way for Mexico to avoid a recession if the United States goes into a recession. Falls in Mexico’s GDP may occur until the following year.
So, it is time for prospective, understood as the discipline whose field of study is the future, which is intended to be analyzed and built as much as possible, and whose main objective is to anticipate what may happen, measure the risks, design our preferred tomorrow and promote the best possible future.
The only way in which we can have some control of the variables that are going to affect us is to do the prospective. These times are given for the ‘prospectivists’. They require time and space to build futures, but for the purposes of this issue some of their most basic recommendations are:
One, make a diagnosis of our strengths and weaknesses and then adjust them to the conditions in which we live. Two, locate the megatrends that allow us to build a five-year approach (these cannot be reversed but must be included in the medium- and long-term strategic planning project). Three, detect the changes that come at high speed and that are erratic.
Thus, for example, an element to consider at this time is the volatility that exists with the exchange rate or the increase in the cost of money in such a way that, putting all this in the equation, it is very pertinent to be clear about the impacts that will be they may have with credits, but above all how this will trigger multiple consequences: more expensive merchandise, a higher cost of credit for suppliers, surcharges in freight transport…
A wise piece of advice for times as uncertain as the present is to make adjustments to the situation but not to the structure. In other words, don’t change teams, avoid substantive short-term changes, don’t lose strategy, and much less lay off essential talent. In taking risks, it is important not to lose sight of the fact that, in the end, these types of recessive waves are temporary, finite.
Now, in the immediate term, the mindset of an investor or someone who has a business has to consider cost control, identify which ones are justified and which ones are not to negotiate with suppliers, and define the best formula that allows all the actors in the chain assume the price increase. That said, we must take care of the inflation that comes from costs and expenses.
Another story is the credits. The interest rate is going up and so the cash going to the debt will be higher. Therefore, it is very important to be clear that more money will have to be allocated only to pay interest. Also, what will happen is that debtors will take time to pay, so you have to be very careful with accounts receivable.
In the face of a recession, it is necessary to measure whether the business will be affected by a ‘slowdown’ in the sector in which it is located, since operating in an elastic industry is not the same as inelastic. With this, telephony will be the big winner in this story because it has the ability to quickly transmit the impacts of costs and expenses to its customers. Banks will also increase their profits.
A principle that resurfaces in times like these is that recessions feed on themselves due to the cutbacks in spending by households, the increase in debts and defaults that cascade; therefore, for families and their members, the advice is: caution when buying and borrowing, and take care of employment.
Mexico, since 2018, registers decreases in growth. Of course, during 2021 and 2022 there has been growth but against a lower base. What is coming forward is an accentuation of this situation; stop, stop, stop.
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The immediacy of the thinking of US companies based in Mexico, meanwhile, is in another circumstance. Your worries are not in the recession today. The bomb that will explode, they warn, is linked to the United States-Mexico relationship and, specifically, with the declaration that Andrés Manuel López Obrador will launch on September 16 around the electrical chapter in the T-MEC. In the end, they argue, their country’s economy will recover in 12 to 18 months, but whatever comes with the trade deal could be more damaging.
Editor’s note: Jonathán Torres is managing partner of BeGood, Atelier de Reputación and Storydoing; business journalist, media consultant, former editorial director of Forbes Media Latam. Follow him on and on Twitter as . The opinions published in this column belong exclusively to the author.
