Economics: Various domestic factors and US slowdown prompt revision of 2022 and 2023 estimates
So far this year, the international economy has been rocked by a range of factors including mounting inflation, with especially pronounced gains in the prices of foods, energy and other commodities, higher interest rates than had been anticipated, uncertainty, and financial market volatility. These factors threaten to accentuate the world economic slowdown in 2022 and raise the risk of a world recession in 2023.
Through the first months this year, the Mexican economy has expanded in agriculture and the secondary sector alongside acceptable although quite uneven levels of service sector activity. Manufacturing and retail commerce have stood out for rebounding above pre-pandemic levels. Such data might help to explain the IMF’s announcement last Tuesday to upwardly adjust its 2022 growth estimate for Mexico even as it shaved 1.4 points off its forecast for the US, a seemingly incongruous move given that US demand for Mexican non petroleum exports has been the main growth driver of Mexico’s economy.
But as new statistics emerge, especially those corresponding to the second quarter of 2022, we see further evidence of US economic slowing that will undoubtedly undercut US demand for Mexican goods. Furthermore, a series of factors inside Mexico are likely to crimp GDP performance in the coming years. Lastly, interest rate rises have been more pronounced than anticipated and will gradually slow spending on goods and services and economic growth in both the US and Mexico.
In this week’s report we analyze Mexico’s growth prospects at a time of increasingly complicated conditions internationally and we present revised 2022-2024 estimates for Mexico under scenarios involving a US slowdown or an outright recession.
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