Mexico’s economy maintains its dynamism: IMEF

Mexico’s economy maintains dynamism, said the Mexican Institute of Finance Executives (IMEF) when interpreting its two indicators on the state and direction of manufacturing production, consumption and services in the country.

The IMEF reported that the indicators Manufacturing IMEF y Non-manufacturer for the month of October registered a level that suggests a slight expansion of the Mexican economy at the beginning of the fourth quarter of the year.

The IMEF Manufacturing Indicator for October fell 0.2 points compared to September 2022, placing itself marginally in the expansion zone (50.1).

The Manufacturing IMEF Indicator has registered some volatility in recent monthsalways fluctuating around the threshold of 50, and in line with the global trend of a slower growth rate in the trade and manufacturing sectors.

The IMEF Indicator varies in an interval from 0 to 100 points and the level of 50 points represents the threshold between an expansion (greater than 50) and a contraction (less than 50) of economic activity.

The IMEF Non-Manufacturing Indicator accelerated in October compared to the previous month, going from 51.1 to 51.8 points. With this data, the Non-Manufacturing Indicator accumulates nine consecutive months in the expansion zone, reflecting the good dynamism of this sector in the Mexican economy throughout 2022.

“Although the results of the month do not reflect an extremely vigorous dynamism of economic activity, they do reveal that the growth trend is maintained towards the end of 2022,” the IMEF said.

The IMEF Manufacturing Indicator, in fact, closed practically around the threshold of 50, which tells us that the sector hardly grew during the month. However, the Non-Manufacturing Indicator continues to record levels of continued dynamism, accelerating compared to September and already accumulating nine consecutive months in the expansion zone.

According to the timely estimate of GDP published by INEGI, the economy grew 1.0% in the third quarter of 2022, thus accumulating three consecutive quarters around a quarterly growth of 1.0 percent.

The former implies a annual growth of 2.7% in the first nine months of the year.

The growth expectation for 2022 from the latest IMEF expectations survey is 1.9%. But for this figure to materialize, the economy would have to contract around 2.5% in the fourth quarter, which contrasts with the results of the IMEF Manufacturing and Non-Manufacturing Indicators, which anticipate an expanding October.

Globally, the short-term economic outlook continued to deteriorate. Proof of this is the recent adjustment to growth and inflation forecasts made by the International Monetary Fund, within the framework of its Annual Meetings in conjunction with the World Bank.

Specifically, regarding economic activity, they highlight, on the one hand, a decrease in the growth expectation of the United States from 2.1% to 1.6% for this year, which remained constant at 1% for next year, and, on the other hand, the other, widespread reductions in the outlook for economic activity for 2023 that led to downward revisions in global growth forecasts, for advanced and emerging economies, from 2.9 to 2.7%, from 1.4 to 1.1% and from 3.9 to 3.7% , respectively.

Regarding inflation, extensive upward revisions continued to be reported for this and next year.

In this regard, the IMEF indicated that, although the average levels of inflation expected for 2023 are lower than those estimated for 2022, they continue to be higher than those registered in 2021 and significantly higher than those observed before the pandemic, which suggests that the inflation outlook will continue to be complex for a long time.

Consequently, it is anticipated that the central banks will continue to increase their reference rates at a faster rate and that, given this, the risk of recession in various economies will materialize in the coming months.

Thus, the international organization expects that 43% of the 72 economies for which it makes quarterly projections of economic activity will fall into technical recession during 2022-2023, a proportion that increased from just over 10% last July.

roberto.morales@eleconomista.mx