It’s been 18 days of 2022 and we already know one thing: this is a year where forecasters are at risk of making fools of themselves. Mexico and the world are strange, that makes many things difficult to predict. It is politics, geopolitics, climate and health, among other things.
We can bet that the GDP will not reach the 4.1% that the Mexican government projected at the time of preparing the budget and that inflation will be above the 3.6% that appears in said document. The GDP will be hit by the weakness of the end of 2021, but also non-economic factors, starting with the covid that refuses to say goodbye. Inflation… hits everything.
Who dares to put a number on the value of the peso against the dollar at the end of the year? The super peso has held up for three years, but this happened in the context of negative real rates in the United States. We will have three interest rate hikes in the United States and a tightening of monetary policy by the Fed. The peso will face volatility throughout the year and the Bank of Mexico will be under scrutiny, but not everything will depend on the work of the bank center and its new governor. The inflows and outflows of capital will depend on many other things, for example the outcome of the electricity counter-reform, the way in which the Pemex rescue works and even the signals that are emitted in the process of selling Banamex.
Commodities rose a lot in 2021 and started 2022 with a bang. Oil is at the highest levels since 2014. So far this year it is up just over 12 percent. The rise in black gold reflects the enormous geopolitical tension caused by the situation in Ukraine where Russia could intervene militarily. The price also expresses the drama in other theaters, yesterday it was the attacks on oil facilities in the United Arab Emirates, by Yemeni guerrillas.
The Mexican mixture closed yesterday above 80 dollars per barrel. If we take the export levels of 2021 as a reference, they would mean revenues of a little more than 80 million dollars per day, because around one million barrels per day were exported. We cannot take the 2021 figures as a reference because the goal for 2022 is to significantly reduce exports. According to what was announced, exports will be 435,000, this is 57% less.
There will be less foreign currency generated by crude oil, but the government plans to compensate with a reduction in imports of oil products. In 2021, each month more than 4,500 million dollars of products such as gasoline, diesel and jet fuel were purchased abroad. How much can imports go down? It all depends on the responsiveness of our refining system. Unofficial forecasts are inauspicious, but let’s not anticipate eve. What happens will have an impact on the trade balance, public finances and retail prices.
We live in absurdly complicated times to make forecasts. Farm products are an excellent example. The United States will have the worst orange harvest in more than 80 years, due to a plague. There they talk about the increase in the price of orange juice. Here, one of the topics is the lemon. Behind the increase of more than 120% in the price of this product there is speculation, but also weather phenomena that have caused production in Mexico to collapse. They are cold fronts that affect the producing regions: Michoacán, Colima, Veracruz and Oaxaca. These cold fronts will continue to be present in the coming weeks.
The weather is one of the risk factors for the Latin American economy in 2022, according to the World Bank. We will have the La Niña phenomenon until the middle of the year. There will be droughts and then hurricanes. Opportunities and threats that will be expressed in harvests and prices. Anyone who wants to make predictions does so at their own risk.
lmgonzalez@eleconomista.com.mx
General Editorial Director of El Economista
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Degree in Economics from the University of Guadalajara. He studied the Master of Journalism in El País, at the Autonomous University of Madrid in 1994, and a specialization in economic journalism at Columbia University in New York. He has been a reporter, business editor and editorial director of the Guadalajara newspaper PÚBLICO, and has worked for the newspapers Siglo 21 and Milenio.
He has specialized in economic journalism and investigative journalism, and has carried out professional stays at Cinco Días in Madrid and San Antonio Express News, in San Antonio, Texas.
