IMEF maintains its projection for Mexico’s GDP at 1.2% this 2023

He Mexican Institute of Finance Executives (IMEF) kept the projection of 1.2% of the Gross Domestic Product (GDP) unchanged for this 2023, however they anticipate a scenario of economic weakness, which represents a less favorable business environment.

“Our survey shows GDP growth of 1.2% in 2023, unchanged from the January survey, but significantly less than the 3% observed in 2022, also remaining below the 2% that is considered to be the growth potential that our economy could achieve under current conditions,” said José Figueroa Palacios, national president of the IMEF, at a press conference.

Mario Correa Martínez, president of the IMEF’s national committee for economic studies, explained that if Mexico registers economic growth of up to 2%, it is still insufficient and therefore it will be a difficult year for companies and households.

There are many risks in the environment and especially in (economic) growth, although we are seeing a slight improvement in the forecasts, it must be viewed with great caution. There are many things that are not going well,” said Correa Martínez.

Mexico has an opportunity to improve its economy with the relocation of foreign companies to reestablish value chains, also known as nearshoring. However, there are still no conditions for the entry of companies to be “open doors”, commented the president of the committee.

The companies, Martínez specified, that are well capitalized are taking advantage of the opportunity cracks in the lowlands and in the north, since they are the regions where there are conditions for this type of production to take place.

“If the door were wide open, we could be growing at rates above 6% in the next two or three years, but a lot of policy changes are required,” Martínez said.

Inflation and rise in reference rate

The IMEF highlighted that inflation started the year with upward surprises, standing at 7.91%, especially in the underlying component and that it has not yet changed towards a clear downward trend in annual comparison.

Given this, José Figueroa Palacios, president of the IMEF, considered that the Governing Board of the Bank of Mexico make at least two more increases of 25 base points in the reference rate. However, they do not rule out another 50 basis point increase as happened a few weeks ago.

In this sense, the increases will depend on how much the inflation in February and how the Federal Reserve of the United States with its monetary policy.

The Governing Board of Banco de México increased the reference rate by 50 base points a few days ago to place it at 11%, which is a level not seen since the inflation targeting strategy began, which was in 2001. The IMEF forecasts that 2023 closes with inflation of 5.2% and a reference rate of 10.38 percent.

santiago.renteria@eleconomista.mx