The form of the economic recovery in 2021 is relevant because it is the basis of the activity in that year, explained the director of the Institute for Industrial Development and Economic Growth (IDIC), José Luis de la Cruz.
The initial rebound of 2021 in economic activity, driven by the United States and the very low annual comparison base, were unsustainable for the rest of the year because there was no internal fiscal strategy to take advantage of it and extend it, said the specialist, in which experts from the business consultancy Oxford Economics and the fund administrators Vanguard and Franklin Templeton.
For the second half of last year, the closure of companies, the slowdown in the manufacturing sector, mainly the automotive sector, and the persistence of inflation, which did slow down consumption, ended up weakening economic activity.
According to the IDIC expert, the shape of the recovery after the global shock of the pandemic is in the form of an “asymmetric W” that implies a deep fall in 2020, of 8.2%, an arithmetic rebound of GDP between 4.8 and 5 % and a weakening in the economic recovery for 2022 that will lead to an advance between 1.5 and 1.7 percent.
American engine, insufficient
Despite the dynamics that the US machinery printed, via exports and remittances, it could not be sustained for the second semester and ended up stalling in a plummeting investment environment, inflation that affected consumption and the new wave of infections that followed. affecting supply chains.
For this year, it is expected that exports will continue with a positive dynamic, but also with a tendency to slow down, since the problem of the interruption in the supply chain will continue to affect the automotive sector, which contributes 3% of the national GDP and 17.2% of the manufacturing sector. To this scenario, we must add the persistence of inflation and its impact on the consumer’s purchasing power, which will continue at least in the first half of the year, plus the rise in rates in Mexico and the United States.
Heterogeneous recovery
The senior vice president and co-director of investments at Franklin Templeton, Ramsé Gutiérrez, foresaw since last December that the Mexican recovery will have a “K” shape, assuming that the entities linked to exports and manufacturing have maintained a more dynamic activity compared to the rest , where the services affected and vulnerable to the new waves of the pandemic are located.
De la Cruz agrees that the components of GDP will present a “K” shaped recovery, where the primary sector could be pointing up. But it is a characteristic heterogeneity of Mexico, he said.
The Economic Activity indicator and the December nowcast, which is the Timely Indicator of Economic Activity, show a quarterly contraction of GDP in the last quarter of the year and an annual stagnation very close to zero, he described.
Structural damage, by modest stimulus
The expert’s diagnosis is not isolated from that of other specialists. The Mexican economy suffered significant structural damage from the modest fiscal support it received during the pandemic and lockdown. This deterioration led to a slower economic recovery in 2021 whose languor will also continue into 2022, stressed the chief economist for Latin America at the Oxford Economics consultancy, Marcos Casarín.
The decision not to use a countercyclical fiscal policy after the pandemic has meant that Mexico experiences the most fragile recovery in the region, Casarín stressed.
Impacts of new Covid variants will prevail
Yorio rules out stagflation
Gabriel Yorio, Undersecretary of Finance and Public Credit (SHCP) ruled out that the Mexican economy is experiencing stagflation and technical recession, as some analysts have commented.
“We are going to continue to see the impacts generated by the waves of Covid from the new variants, that is also going to be reflected in economic activity, but the economic recovery continues and we are going to look ahead at these restrictions or impacts on the supply side. . There is a lot of talk out there about the stagflation process and we do not agree that we are in such a situation”.
Regarding the technical recession, the official explained that to talk about it, one must not only observe a fall in the GDP, but also see the behavior of other variables, such as employment, where he assured that the productive capacity has increased and many of people who remained unemployed have returned to the labor market.
However, he indicated that the economic recovery will be limited by the supply shocks caused by the pandemic. “Very specifically, we have high shipping costs, which have become 10 times more expensive compared to pre-pandemic.” (Belen Saldivar)
ymorales@eleconomista.com.mx
