Mexico’s GDP contraction is a bump in the rebound: BofA

At Bank of America Securities, they consider that the contraction observed in the Gross Domestic Product (GDP) in the third quarter is just a pothole in the recovery.

“The United States continues to grow, although it had a slowdown in the third quarter, not so great, a bit also due to Covid and the interruption of production chains, they will continue to grow at rates basically around 5%, which is a very important boost. important for Mexico ”, explained the economist for Mexico and Canada at BofA Securities, Carlos Capistrán.

So he considers that despite the “stumble in the third quarter”, Mexico can grow by 6% this year, albeit with downside risks.

Interviewed by El Economista, he explains that for next year it is also possible that the Mexican economy will advance 3.5% due to the uncertainty of the Covid and the supply chains. But he warns that the risks are to the downside.

From New York, he says that at some point Mexico will have to produce more cars because there is demand in the United States and its inventories are at historically low levels. As soon as the production chains are reactivated, Mexico will accelerate its participation. But it is very difficult to know if it will be in the first semester, in the second part of next year, or until 2023, he said.

We believe that the reactivation of the production chains will take place in the middle of next year. If it is activated in the first quarter of 2022, even the government’s forecasts of a growth of 4.1 percent can be reached ”.

So the outlook for next year still has a lot of uncertainty, as it will continue to be affected by the interruption of production chains and Covid-19.

Whatever the case may be in the trajectory that the economy and vaccination will follow, economic activity next year will maintain the rebound after the closing due to the pandemic.

Eventually Mexico will go into the more natural trend of growth that has traditionally been between 2 and 2.5 percent.

The BofA strategist explains that “here in New York, what investors tell us is: First they invite us to help them produce energy and then they tell us that our participation is not necessary. And in what Mexico agrees, its capacity to grow is diminished ”.

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