Nuevo León’s economy could grow this year to pre-pandemic levels, but not in the country: Joana Chapa

Monterey, NL. The state of Nuevo León has better growth expectations for this year, compared to the national level, because its economy is closely linked to the United States, where containing inflationAdded to this is the arrival of Foreign Direct Investment. The main challenge is food inflation caused by the Ukraine War, Joana Chapa Cantú, director of the UANL Faculty of Economics, told El Economista.

He explained that the Center for Economic Research (CIE) of the UANL made an abrupt change in the forecast of how the economy is going to close this year, since a closing of 3.48% had been estimated, however, inflation affected families from the lower marginal stratum more, with rates of up to 10%, so the GDP growth expectations for the end of this year are between 1.4 and 2 percent.

Although the Package Against Inflation and Famine (PACIC), is an agreement between the federation, the producers, and merchants, to guarantee fair prices in the products of the basic basket, it is voluntary, and the commitment is not to increase the prices of the basic basket of 24 products, between September and February of next year, he recalled.

With this policy, during the month of September, the cost of living decreased from 7.9% to 7.5% inflation, while in the population with low marginal income, it fell from 10.9% to 7.3 percent. This is explained because the impact of inflation is stronger in the low-income population.

“If the majority of merchants join in, there would be a greater positive impact on people from the lower marginal stratum,” he stressed.

In fact, on October 17, the Federal Consumer Protection Office (prophet) mentioned in a statement that in Nuevo León, Chihuahua and Baja California, the basic basket could be found for less than 1,000 pesos in at least one establishment in each state.

Return to pre-pandemic levels

Joana Chapa Cantú pointed out that growth expectations for Mexico are between 1.3 and 1.5% at the end of this year, and to have more precise data on the closure of the Nuevo León economy, we must wait for the results of the third quarter of the Quarterly Economic Activity Indicator (ITAEE), from Inegi, and it is expected that it could close between 1.4% and 2%, and return to pre-pandemic levels.

“We would return to pre-pandemic levels because we still have the effects of inflation.” For example, the increase in grains that Ukraine usually exports and energy from Russia, affect food prices, and it is expected that it will take an undetermined time for them to stabilize again, due to the war.

The latest ITAEE data on the state economy shows a slowdown in the second quarter of 2022, as happened in the United States. The state economy shows a quarterly growth of only 0.28%, while in the first quarter it was 1.3 percent.

In annual terms, to original figures, the growth is 0.33% and with seasonally adjusted figures of 0.65%, mentions the document Indicators of the Economic Environment, which was carried out by Joana Chapa Cantú and Ana Luisa Cordero Ramos.

Considering various scenarios, the following ITAEE forecasts are estimated for the end of the year: If the indicator grew a little faster in the last two quarters than in the second quarter of this year, for example 0.5%, growth in 2022 would be 1.6 percent.

If the index continued to grow as in the last quarter, 0.3%, the growth would close at 1.4 percent. If the growth rates of the first and second quarters were repeated in the remainder, growth in 2022 would be 2 percent.

“Under these three scenarios, at the end of 2022, the Nuevo León economy would be at pre-pandemic levels, which would not be achieved at the country level.”