Macro strength, weak growth


The Mexican economy has two faces.

That of macroeconomic strength, which is enough for the agencies not to downgrade Mexico’s credit rating.

And that of economic stagnation with high inflation, which most experts are beginning to agree on qualifying as stagflation.

And in the medium-term perspective, what is anticipated is that economic growth will remain at minimum levels for the end of this and next year and very probably for the entire six-year term.

And that inflationary pressures will persist until the middle of next year at least. Paradoxically, the López Obrador government, which raised an anti-neoliberal banner and criticized the low level of economic growth, is in exactly the same circumstance that it has always failed.

His main campaign offer was to achieve an economic growth rate of 4% per year, although over time he measured it and said it would be the six-year average.

The safest thing is that the average growth in this administration is lower than that registered in previous governments, around 2%.

The Mexican economy will grow less. But yes, like those, with macroeconomic strength.

Although the balance at the end of the period remains to be seen, due to the growing cost of flagship works, social programs and the liabilities of Pemex and the CFE.

For now, what the Mexican government’s economic rating agencies value most is precisely its macroeconomic stability.

Fitch Ratings forecast that the growth of the Mexican economy will slow to 2% in 2022 and remain at this level in 2023.

As a result, Mexico’s real GDP level will not reach pre-pandemic levels until 2023, lagging behind both the rating and the region.

Regarding inflation, the agency indicates that high levels may increase its persistence outside the range of the Bank of Mexico (Banxico) and continue to affect short-term expectations.

And precisely regarding inflationary expectations, a Bank of America (BoFa) survey reveals that in the face of high inflation, investors believe that Banxico will raise rates above 9% at the end of the year. Although the vast majority estimates that it could be between 7.25 and 9%, in the May survey, 10% of the investors surveyed responded that the central institute’s reference rate will close the year at between 9.25 and 10%.

They expect Mexico’s GDP to grow up to 2.5% this year.

For its part, the Mexican Institute of Finance Executives (IMEF) considered that the Mexican economy is already in stagflation.

That is, the economy remains stagnant and with high inflation.

The Mexican economy maintains the two faces that it has had for years: that of macro stability and that of weak economic growth.

Neoliberal governments failed to grow the economy, although they maintained expectations of potential growth.

The current government maintains solid macroeconomic stability, but has further weakened the rate of economic growth.

glimpses

SOS- The president of Coparmex, José Medina Mora, issued a bold warning about the risk posed by the growing number of air incidents.

The business leader launched a kind of SOS about the risks in the airspace.

Via his Twitter account, he said that the most serious aspect of the crisis related to airspace management is that today the risk of an accident resulting in loss of life is latent and must be addressed without delay. Recent incidents at the AICM reveal that the problem has deepened.

In its signal, Coparmex warned that the country is facing a “major crisis”, the one related to the management of air space. Perhaps we are seeing ‘the tip of the iceberg’ -he warns- in a problem that was announced in 2018 by MITRE, which warned that the operation of three airports, AICM, AIFA and Toluca, would require the creation of an “extremely complex” airspace ”, a warning that “was ignored”.

Marco A. Mares

Journalist

Rich and Powerful

He has worked continuously in newspapers, magazines, radio, television and the Internet, in the last 31 years he has specialized in business, finance and economics. He is one of the three hosts of the program Alebrijes, Águila o Sol, a program specialized in economic issues that is broadcast on Foro TV.



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