Slowdown and inflation to close the year

The Inegi does have the data and they are worrying because between Friday and Monday we could see that we will end the year with high inflation and an economy in a frank slowdown.

Energy prices have risen 12.67% in annual terms and although President López Obrador does not like to hear it, the electricity that is distributed monopolically by the Federal Electricity Commission rose 18.8% during the first fortnight of this month.

Sure, it’s the end of the subsidy season for some northern states after the summer season, but LP gas hasn’t stopped rising despite price caps.

And after energy are increases in food, such as livestock, eggs, milk, meat, which accumulate an annual inflation of 12.3 percent.

In short, the increase in inflation deserves the full attention of the monetary authorities and it would be best if the political authorities did not get so involved in this issue except, of course, to avoid further pressure with strong increases in their prices and rates.

Where you do have to listen to the pretexts, but, above all, the strategies to follow are in terms of economic behavior.

The data from the Global Indicator of Economic Activity (IGAE) until last August ignite the warning lights due to the expectation that the Gross Domestic Product (GDP) may actually rebound more than 6% as considered by the federal government and not a few analysts.

The August IGAE showed a negative result of -1.6% that the market did not expect. Above all, because its main component, the tertiary sector, showed a drop of 2.5%, which aggravated the decline that this sector that groups trade and services had shown since June.

The secondary sector, where manufacturing dominates, has flattened in its recovery process and barely achieved growth in August of 0.4 percent.

While the primary activities that are as marginal and volatile as the temporary ones continue with their independent rhythm of the pandemic.

This August IGAE result does not anticipate good news for the first reading of GDP for the third quarter of this year, because the data we are learning for September do not anticipate a drastic change in this behavior.

So it cannot be ruled out that the GDP for the July-September quarter of this year could have turned out negative.

Consumption along with services are the main engines of the Mexican economy and they were not able to reverse the decline they experienced during the summer. Consumption grew so little in September that it was not enough to prevent a quarterly decrease today calculated around -1 percent.

The industrial sector maintains bottlenecks in supply and logistics that do not predict a buoyant quarter either, and although agricultural activities could have a very positive percentage performance, their contribution to the size of Mexico’s GDP is lower.

If it is confirmed this Friday that the scenario facing Mexico is a return to negative GDP (not recession) and with inflation twice the official goal (not stagflation), it will be a hard emotional and political blow for a government that already sang victory.

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Enrique Campos Suarez

Host of Televisa Newscasts

The great Depression

Graduated in Communication Sciences from the National Autonomous University of Mexico, with a specialty in finance from the Autonomous Technological Institute of Mexico and a master’s degree in Journalism from the Anáhuac University.

His professional career has been dedicated to different media. He is currently a columnist for the newspaper El Economista and a host of newscasts on Televisa. He is the owner of the 2:00 pm news space on Foro TV.

He is a specialist in economic-financial matters with more than 25 years of experience as a commentator and host on radio and television. He has been part of companies such as Radio Programs de México, where he participated in the VIP business radio. He was also part of the management and talent team of Radio Fórmula.

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