The recession will hit Mexico in 2023 with its GDP falling for three consecutive quarters.
Given the risks of a global recession, especially in the United States, on which Mexico depends to a large extent, the Mexican economy will face a difficult 2023, according to an analysis by Moody’s Analytics .
The entity’s forecasts show that the Mexican economy will have a growth of 1.8% in 2022 and that in 2023 , the contraction will be 1.7% .
“The Mexican economy is facing a combination of unfavorable events: persistence of supply shocks in the global economy , high prices of raw materials , and weakening of domestic demand due to the need for greater monetary restriction to bring down high inflation”, highlights the report prepared by Alfredo Coutiño , director for Latin America of Moody’s Analytics .
The analyst points out that with high inflation, the Bank of Mexico (Banxico) sees the need to “tighten” monetary policy and take the rate to restrictive territory. Analyst surveys indicate that the reference rate could end at historical levels of 9.5% .
The fact that Banxico raises its rate to that level will have as a consequence a depressed demand that will weaken the behavior of the economy.
Mexico will emerge from recession in the first quarter of 2024, Moody’s reported, as will the US economy and the recovery of the economy and the return of inflation to the central bank’s target will occur until 2025.
