Private sector lowered its growth expectations for Mexico to 1.76%

Experts from the private sector reduced the forecast of growth of Mexican Gross Domestic Product (GDP) for 2022 to 1.76%, as revealed by the monthly survey conducted by the Bank of Mexico among specialists in March, which was released on Friday, April 1.

This growth estimate is lower than expected in February, when specialists estimated a 2.04% increase in the economy for this year, according to the average of the projections of 37 local and foreign analysis groups received between 18 and 30 March.

By 2023, experts estimate that the economy will grow by 2.08%, down from the 2.13% forecast a month earlier.

The central bank poll also reflected a rise in the overall inflation forecast for 2022, which they expect to stand at 5.86%, up from 4.78% estimated the previous month.

While by 2023, consumer prices would rise another 3.98%, up from 3.83% a month earlier.

The Mexican inflation rate closed 2021 at 7.36%, remaining at its highest level in 2 decades.

In order to control inflation, the Banco de México announced two increases in the interbank interest rate since the beginning of the year, which currently stands at 6.50%.

On the exchange rate, analysts predicted that the peso will close in 2022 at 21.20 units per dollar, while in the previous survey the projected price was 21.25 pesos per dollar.

By the close of 202 3, analysts estimate that it will be exchanged at 21.63 units per dollar, down from 21.71 in the previous month.

Pre-COVID-19 levels were close to 18.5 pesos per dollar.

By 2022, the trade balance expectations were revised downwards, moving from a deficit of $10.863 billion to a deficit of $12.21 billion.

While the forecast for foreign direct investment (FDI) for 2022 went from a projection of 29,387 million dollars to a projection of 29,180 million dollars.

For its part, the Ministry of Finance and Public Credit (SHCP) also lowered its growth expectations for the Mexican economy, although it was a little more optimistic, placing it at 3.4% from 4.1% previously projected last year; while by 2023 it predicted an increase of 3.5%.

The agency pointed to the imbalances between supply and demand caused by the pandemic and the “escalation of the geopolitical conflict between Russia and Ukraine” as the reasons that have forced Mexico and other countries to adjust their growth expectations for this year.

“The Ministry of Finance and Public Credit updates the economic growth figure for public finance estimates to 3.4% in 2022 ″

In presenting the document “General Pre-Criteria for Economic Policy 2022″ to the Honorable Congress of the Union, Treasury said that the administration led by Andrés Manuel López Obrador will continue fiscal policy to maintain healthy public finances, continue the decline in debt and increase collection through the combating tax evasion and avoidance.

The Treasury highlighted that among the challenges for the Mexican economy are “the prolongation of imbalances between supply and demand resulting from the covid-19 pandemic, which caused bottlenecks and logistical problems in global value chains, shortages of industrial inputs, increases in transportation costs and a rise in food and commodity prices, mainly energy,” highlighted the document, which also highlighted the geopolitical conflict between Russia and Ukraine.

However, the document noted, the recognized strength of the country's macroeconomic fundamentals “will allow public debt to remain on a sustainable trajectory by 2022.”

The announcement of 3.4% growth in 2022 would follow the 5.3% growth in 2021 and after the historic 8.2% collapse of the Mexican economy in 2020, the year of the pandemic and its worst contraction since the Great Depression of 1932.

With information from EFE

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