BBVA adjusted its estimate of Mexico's GDP growth to 1.2% by 2022

While BBVA Mexico had predicted that Mexico's Gross Domestic Product (GDP) by 2022 would grow by 2.2%, the banking institution has now adjusted its estimate and mentioned that growth would be 1.2%.

This was stated by BBVA's chief economist, Carlos Serrano, during a press conference, explaining that this adjustment is partly due to the conflict between Russia and Ukraine and its effects on “global value chains”, as well as the impact it has had on global energy prices.

Similarly, this new forecast is based on figures from the National Institute of Statistics and Geography (Inegi), since according to its data, during the fourth quarter of 2021 the Mexican economy stagnated and the country is currently in a slow recovery compared to other Latin American countries.

While other countries have shown greater economic recovery from the first quarter of 2020 to the fourth quarter of 2021, with a cumulative increase of more than 7.0%, such as Chile (9.7%), Colombia (9.3%), Peru (9.1%) and Argentina (7.8%), Mexico registered a contraction of -2.4% during the same period.

“The dragging effect of weak growth in 2022 will have an impact on GDP dynamism in 2023, with an extended effect of a higher price level,” mentioned in the report Situación México.

On the other hand, with regard to domestic demand, the study indicates that estimates for private consumption are affected by the increase in energy prices.

The most affected sectors were construction and manufacturing, particularly the automotive sector, which in January recorded a used capacity of 73% compared to the 83% average obtained in the year prior to the COVID-19 pandemic.

As for employment in Mexico, the unemployment rate stands at 3.7%, while labor informality has remained at 54.7%. According to the National Survey on Employment and Employment (ENOE), 31.2% of the population is in the condition of “job insecurity”.

Despite the growth in the number of workers affiliated with the Mexican Social Security Institute (IMSS) from January to March 2022, with 321,000 new formal jobs (adding a total of 21 million jobs affiliated to Social Security), BBVA Mexico indicated that the level of employment still remains “1.3 million below its trend level”.

It should be recalled that by the end of January 2022, BBVA had reduced its forecast of Mexico's GDP growth for this year from 3.2% to 2.2%. It was also detailed that consumption in the country fell close to 0.4% per year in the third quarter of 2021.

Meanwhile, the private sector has forecast GDP growth for this year to be 1.76%, according to the monthly survey conducted by the Bank of Mexico in March, which was given to know last april first.

This estimate also showed a reduction compared to that expected in February, when specialists calculated a growth of 2.04%. The projection for 2023 is that the Mexican economy will grow by about 2.08%.

For its part, the Ministry of Finance and Public Credit (SHCP) also adjusted its estimates for the growth of Mexico's economy, placing it at 3.4% compared to 4.1% expected last year. Its expectation for 2023 is that GDP will increase by 3.5%.

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