ECLAC forecasts that Mexico's GDP will grow 2.9% this year due to moderation of the US engine

The Economic Commission for Latin America and the Caribbean (ECLAC) cut its growth forecast for Mexico, which was still at 3.2% in December and now expects a 2.9% advance in the Gross Domestic Product (GDP) for this year.

This performance will be lower than the growth achieved by the Mexican economy last year when it would have rebounded 5.8% according to projections from the same commission; data that will be confirmed by the Inegi on February 25 and that according to the expectations collected by Citibanamex will be 5.5 percent.

In the presentation of the “Preliminary Balance of the economies of Latin America” launched from Mexico by the Executive Secretary of ECLAC, Alicia Bárcena, argued that this moderation in the economic dynamics of the Mexican GDP will be the result of a lower impulse from the United States as well as the impact of the inflationary rebound on household income.

As the ECLAC executive secretary explained, Mexico was one of the great beneficiaries of the economic stimulus that the United States granted to her country in the health emergency, since it favored a greater flow of remittances and reactivated exports, especially manufactures.

In fact, it stated that Mexico’s domestic consumption played a fundamental role in the economic recovery during 2021, which was fueled by the historic flow of remittances that I arrive to the country.

But he acknowledged that this impulse will begin to soften with the economic slowdown in the United States and in view of the structural weakness in investment and productivity that Mexico has, as well as the rest of the countries of the region.

Inside the document they show that Mexico will be one of the 19 countries in the group that will take the longest to recover the economic levels of 2019, which are prior to the health crisis.

Attractive for FDI

The ECLAC’s executive secretary ruled out that there is a specific environment of uncertainty against Mexico among investors and recalled the size of the consumer market that the country represents as well as the Trade Agreement with the United States, to emphasize that they are consistent and permanent attractions for companies .

Mexico has not lost the confidence of investors and therefore does not have to recover it. It must maintain it (…) Mexico is one of the two most attractive countries in the region for foreign productive investment and what would be relevant is that it foster the conditions to strengthen its productive capacity, innovation and human capital, he stated.

The official identified three risks for the Mexican economy this year: the resurgence of the pandemic, bottlenecks in the international supply chain, as well as the tightening of financing conditions.

ECLAC is the second international organization to update its economic expectations behind the World Bank, which only on Tuesday left its forecast for Mexico at 3%, a rate that is far from the official estimate by the federal government , which is at 4.1 percent. The International Monetary Fund (IMF) will release its update on January 25.

ymorales@eleconomista. com.mx