After a complicated 2022 in economic matters, the outlook does not look so promising for next year, according to the projections of both international and national organizations.
The Organization for Economic Cooperation and Development (OECD) and the Bank of Mexico (Banxico) are some that have lowered their estimate for the Mexican economy, with 1.5% and 1.6%, respectively; while the International Monetary Fund (IMF) maintains its expectation at 1.2%.
GDP
And despite these projections, the Ministry of Finance and Public Credit expects a growth of 3%.
“We are much more aligned with the panorama that the IMF is seeing than the numbers that the Ministry of Finance is seeing. We believe that it is an unrealistic assumption and it is not based on what we are observing in the data,” said Montserrat Aldave, chief economist at Casa de Bolsa Finamex, noting that they estimate 1.4% growth in Gross Domestic Product (GDP).
To do this, he added, it is necessary that “consumption continue to recover gradually, as it has been doing,” albeit moderate.
The good news is that a recession is not contemplated for 2023: “We are not observing contractions in the indicators,” anticipated the Finamex specialist.
The fact that the economic recovery has not reached pre-pandemic levels, like other countries, may work in favor of Mexico to achieve the expected economic growth.
Reshoring
Another factor that can help economic growth has to do with better use of reshoring (relocation), as well as taking advantage of the microchip law of the United States president, Joe Biden.
In the opposite direction, there are downward biases for the Mexican economy, such as better external demand, since exports have been the engine for the Mexican economy in the last year, warned Montserrat Aldave.
The IMF itself announced a downward adjustment to growth in the United States, going from 2.9% to 2.3% for the end of this year. In addition, analysts see a recession in the northern neighbor, the main buyer of Mexican merchandise.
Another aspect has to do with any friction or escalation of conflicts in the T-MEC.
Let us remember that the three trading partners of North America are in the midst of consultations on energy matters due to the policy of the government of Andrés Manuel López Obrador.
Inflation
The increase in the price of products and services has been a pain for the pockets of Mexicans this year, particularly for those who earn the least, and it is not seen that the consumer price index will drop to the 3% goal of the Bank of Mexico (Banxico ) the next few months.
The central bank has tightened the reference interest rate, taking it to a historic 9.25% in the latest monetary policy decision, to try to lower inflation.
“We continue to see a lot of pressure on inflation. We don’t think the shocks we’ve been seeing this year are going to dissipate in a major way; we have seen that they have shown to be much more persistent”, anticipated Aldave from Finamex.
That is why Casa de Bolsa Finamex sees 3% in inflation until 2025; “For 2024 we see some persistence in high numbers, especially for the underlying part,” said Finamex’s chief economist.
stagflation
About the stagflation scenario -high inflation and low economic growth- at a global level. Aldave pointed out that the world is already experiencing a scenario of high prices and low economic growth. Even with downward revisions for inflation and downward revisions for gross domestic product.
However, “we do not see recessions, for example for the United States. We do expect much lower growth for both Mexico and the United States, but we do not see recessions in that we do not see contractions in economic activity, at least in terms of annual rates,” he said. However, “it is true that we are in a new world,” he concluded.
