The International Monetary Fund (IMF) cut its growth expectation for Mexico by 1.2 percentage points of the product for this year and now estimates that the economy will achieve an advance of 2.8% in 2022.
This cut, from 4% projected in November, will be the result of the decline in the purchasing power of Mexican consumers due to inflation and the weakening of exports to the United States, revealed in the update of expectations of the Gross Domestic Product (GDP ) world.
According to the first deputy managing director of the IMF, Gita Gopinath, the interruptions in the supply chain and the high infections by Covid-19, have been decisive for the downward revision in expectations for Mexico.
In a press videoconference, the last one where he participated to present the report since it is already the second on board at the IMF, he admitted that they applied “significant degradations in the growth expectation of Mexico and Brazil.”
He explained that in the case of Mexico, this year the slowdown that began in the second semester will continue to drag on due to interruptions in the supply chain and the increase in infections.
In fact, the IMF estimates that the rebound of the Mexican economy in 2021 was 5.3% in GDP, which also lowers the forecast they still had in November, which was 6.2%, disclosed in the conclusions to the annual review under Article IV.
The timely estimate of GDP for all of 2021 will be released on Monday, January 31 by the National Institute of Statistics and Geography (Inegi).
Gopinath highlighted that the cut for the expectation of Mexico’s GDP also incorporates the expectation of tightening monetary conditions in the face of inflationary pressure.
the most conservative
With the IMF’s revised growth expectation for Mexico, it remains the least optimistic organization of the three that updated their forecasts so far this month. The World Bank expects a 3% advance in the Mexican GDP while the Economic Commission for Latin America and the Caribbean (ECLAC) forecasts it at 2.9 percent. Both projections are below the 4.1% that the Mexican government incorporated in the 2022 Economic Package.
For next year, the IMF estimates that the Mexican economy will register an advance of 2.7%, a rate that incorporates an increase of half a percentage point compared to the projection they had in the fall.
Oxford Economics’ chief economist for Latin America, Marcos Casarín, emphasized that another downward pressure on Mexican growth is fiscal austerity.
The expert highlighted that “Mexico is the only major economy in Latin America that has not recovered its GDP level prior to the pandemic.”
Casarín maintained that “the fact that an even slower recovery is now expected than a year ago only confirms that the decision not to use a countercyclical fiscal policy after the pandemic has meant that Mexico is experiencing the most fragile recovery in the region.”
Interrupted global recovery
As Gopinath explained, globally the economic recovery was interrupted by rising contagions following the appearance of the Omicron variant and higher inflation.
That is to say, the GDP of the globe will go from 5.9% of expansion that was registered in 2021 to a nuance of 4.4% in the economic dynamics for this year. The expectation for 2022 is half a percentage point lower than the forecast that the international organization presented in the fall.
United States loses dynamism
The slowdown in global performance will be led by the United States, for whom they forecast a 4% expansion by 2022, which also shows less dynamism from the 5.6% that they estimated GDP reached last year.
Like the GDP expectations for Mexico and Brazil, the new expected rate for the US economy incorporates a cut of 1.2 points compared to the expectation for the last quarter of last year, which was 5.2 percent.
Moderate expectation for advanced
The IMF’s expectations update incorporates a cut of 6 tenths of a point for advanced economies, so they now anticipate growth of 3.9% in 2022, lower than the 5% they project they would have reached in 2021.
The leading economies of the advanced conglomerate will be the United Kingdom, with an expansion of 4.7% this year, three tenths of a point lower than the autumn estimate, and Canada, which will achieve growth of 4.1%, also far from the 4.9% forecast by the fund’s economists. in October.
For the Eurozone they expect a GDP increase of 3.9% which is below the 4.3% projected four months ago and they estimate a 3.3% expansion for Japan.
Brazil, with the lowest performance of the G20
As explained by the IMF economist, Brazil was one of the three G20 economies to which it cut its expectations the most, along with Mexico and the United States.
Thus, today they anticipate a 0.3% advance in the 2022 GDP that incorporates the impact of inflation on the economic capacity of consumers and contrasts with the 1.5% projected in the fall.
This degradation, as Gopinath called it, also incorporates the effect of the solid increases that have been applied in the interest rate and that the central bank will continue to promote. Thus, they estimate that the largest economy in Latin America will register the lowest performance of the G20 this year.
This lower performance of Brazil and Mexico will weigh on the GDP of Latin America and the Caribbean, a region for which they forecast an advance of 2.4% in 2022, which is six tenths less than the 3% forecast in October.
For China, which is the second largest economy on the planet, and is still classified in the group of the most developed emerging countries, the Fund’s economists anticipate an expansion of 4.8% this year, lower than the 5.6% projected in October.
The press conference to launch this expectations update was last addressed by Gita Gopinath, who as of January 1, is the IMF’s First Deputy Managing Director, second in command to Kristalina Georgieva.
The agency’s new chief economist will be Pierre Olivier Gourinchas, from the University of California Berkeley, who was Gopinath’s synod in his graduation exam.