Economics: The Mexican economy faces key challenges in 2022
The most important economic challenges facing the Mexican economy in 2022 are rising inflation and sluggish growth. These will be coupled with the weakening of public finances and the uncertainty fueled by how the government’s energy policy will end up being defined.
The first challenge is inflation, which is far from Banco de México's target (3-4%). Upward pressures could increase in the short term if expectations are not anchored and this spills over into price formation.
The second challenge on the economic front for 2022 is to recover the growth in productive activity, since the most recent indicators point to a slowdown in the last quarter of 2021. This was the result of a weak recovery in private consumption and the persistence of very low levels of investment in fixed assets, in addition to the contraction in automotive production and exports due to the supply problems faced by the sector.
The third challenge for 2022 will be to avoid a greater deterioration of public finances than already forecast, derived both from insufficient tax revenue and the expected increase in various components of public spending, including pensions, subsidies, transfers, and public investment, to the detriment of basic services.
In the December 20, 2021 Economic Outlook we analyzed the most important features of the country’s economic performance at the close of 2021 and some factors influencing the outlook for 2022. In this edition we present the main challenges on the economic front and their most important short and medium-term implications, which will unfold in the context of an uncertain and complex international panorama.
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