BBVA Mexico lowers its economic growth forecasts for 2021 and 2022

BBVA Mexico lowered its growth expectations for the Mexican economy for both 2021 (whose official data has not yet been released) and 2022.

Carlos Serrano, chief economist of the bank, explained that for 2021 they have passed their forecast of 6.0% to 5.3%, while for 2022 from 3.2% to 2.2%This, given the challenging prospects due to Covid-19 infections, high inflation and higher interest rates.

He even mentioned that for 2021 there is a possibility that growth will be even lower, as it is not excluded that a negative result was given in the fourth quarter.

In a video conference in which the Mexico Situation Report was presented, the specialist highlighted that the country’s economy experienced a stagnation in the recovery process from the third quarter of last year, which was confirmed by the National Institute of Statistics and Geography (INEGI) . , although the official figure for the fourth quarter of 2021 has not been given.

“We are clearly seeing how the recovery dynamics in Mexico lost strength in the third quarter of the year and this will most likely continue,” he said.

He specified that what lies behind the loss of dynamics in the economy is that after the first two quarters of 2021 in which there was a recovery due to the economic reopening, in the third quarter of that year there were already negative rates as due to the pandemic itself which generated less mobility.

But they also, he said, affected the bottlenecks that affected manufacturing production and exports, in addition to low levels of investment.

“(Although investment) was recovering, it is incomplete. “Pre-pandemic levels are not recovering, and it also adds that it has already fallen in the country before the crisis, and this can be explained by the uncertainty of some economic policies that have caused uncertainty,” he explained.

In this sense, despite the estimated economic growth for 2021 and 2022, he believes that it is an incomplete and gradual recovery, in addition to the fact that it is slower than in other countries in the region.

“The economy has started to recover, but we still have not reached the levels of GDP we had before the pandemic. We have an economy that, if our 2021 forecast comes true, will be 3% below the pre-pandemic level, ”he emphasized.

He added: “We now estimate growth in 2022 at 2.2%. Here, too, there are downside risks, especially, the more persistent this wave of infections can be, the smaller the growth effect will be for this year, and going forward the road looks similar to what it had before. ”

There will be no inflationary spiral

In terms of inflation, Carlos Serrano mentioned that although it is high, it is not an exclusive factor for Mexico, but for the whole world.

He pointed out that there was not and will not be an inflationary spiral as it was in the past, and felt that the peak would have arrived in December, for which he estimated that it would start to decline in the future and 2022 close. bo 4.0%.

In this sense, he foresaw that the Bank of Mexico (Banxico) would again increase the reference rate by 50 basis points at its next monetary policy meeting.

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