Economic challenges for Mexico in 2022

We are only a few days away from concluding 2021, one of the most complicated years that our country has experienced in its modern history; not only because of the continuous development of a pandemic that has claimed thousands of lives, but also because of the many wrong decisions that the Federal Government made in the name of the so-called “fourth transformation”. Today, the low levels of economic growth, the increase in inequality and the permanent deterioration in the execution of public policy have put into question the ability that the administration of my countryman, President López Obrador, will have to attend to the many citizens’ needs by 2022.

There is no doubt that Mexico’s challenges for the following year will be many, especially in economic matters; which can be grouped into three main themes.

First. Reactivate the economy and recover lost jobs. As I mentioned, in 2021, the Mexican economy did not grow as expected. According to official figures, Mexico continues to oscillate at growth levels lower than those that were had before the Covid-19 pandemic and, recently, the expectation of rebounding to 7% growth by the end of 2021 was adjusted downward; This is due to a slowdown in economic activity in the third quarter of the year caused, among other things, by a historical increase in inflation, the disruption in the global supply chain of the manufacturing sector and the absence of government support to companies and citizens.

Today, Mexico has positioned itself as one of the Latin American countries with the highest levels of lag in economic recovery and, as an economist, I am convinced that the only way to correct it is with the creation of more and better jobs; jobs that stimulate growth and development.

Second. Regain confidence and attract investment. In 2022, the Government of Mexico will have to do a lot if it wants to regain the confidence of private and foreign investors, because without investment there is no growth and without growth there can be no well-being or development. Unfortunately, according to Banco de México, in 2021 alone, foreign investment in Mexico fell 15%, the largest annual decline seen in the last 20 years.

Undoubtedly, the economic instability and the loss of capital that we are experiencing are a consequence of the bad political decisions that they have taken, for example, cancel necessary investments, become infatuated with others of doubtful feasibility or promote reforms that favor government companies like Pemex and CFE against economic competition, among many others.

Third. Contain the pandemic and its effects on the economy. By 2022, many experts have pointed out that a new wave of Covid-19 infections is expected, especially with the arrival of the Omicron variant. This has introduced a new level of uncertainty about the economic impact that this wave may have; However, as an economist, I am convinced that this will depend on several factors, including the possibility of new restrictions on trade or tourism, as well as an adequate management of vaccination and reinforcement campaigns, to name a few.

For Mexico, 2022 will imply a new wave of economic challenges and, for the good of all, it is best to be prepared.

Twitter: @PerezSoraya