Stagflation prolonging a crisis in Mexico

The Mexican economy was unable to recover from the serious recession caused by the pandemic and from that economic basement we hit the wall of inflation.

They want to charge the bill for the accelerated increase in prices entirely to supply problems and the alteration in energy and food prices derived from Russia’s invasion of Ukraine. But, a good part of the inflationary pressures come from the enormous spill of money that the United States, especially, poured into its population.

Sure, that country managed to get out of recession and a growth rate in just one year, thanks to government support for its people. Now, what that economy faces is a historical inflation rate and a monetary policy that is going to negatively influence growth.

Mexico was left behind. Due to political decisions, the government of Andrés Manuel López Obrador did not support its citizens with their own money. Because, although the 4T wants to make it appear otherwise, budget resources come from society, whether or not they support the current regime.

The recession derived from the confinement by Covid-19 was a global phenomenon, but the economic stagnation of 2021 and 2022 was induced by local decisions; by the internal policies of this administration.

Inflation is also global and the future consequences of applying the monetary restriction measures applied by central banks, starting with the United States Federal Reserve, will also be of general scope.

But the particular scenario of Mexico is an economy that did not overcome the collapse of 2020 and that in this 2022 already presented a first quarter of stagnation. All with an inflation scenario above 7 percent.

The forecasts of the behavior of the Gross Domestic Product for this year are constantly corrected downwards and are much closer to 1% than the 3.4% that the Ministry of Finance believes can be achieved this year.

This, while inflation could soon initiate a downward correction scenario, but it will take a long time to recover the levels accepted by the Bank of Mexico.

So that shocking word of stagflation, stagnation plus inflation, does seem to apply to the current condition of our country.

The scenario is complicated when we see that since it is a global inflationary pressure, the drop in demand does not help much to discourage price increases. And, on the contrary, encountering increases in costs and final prices does weigh down economic activity.

The United States Federal Reserve says that it is not going to touch the heart to lower inflationary pressures with its interest rates, despite the fact that this has an impact on economic growth.

There is already the anticipation of a new recession in the United States for next year.

This complicated scenario in the world surprises Mexico inside the crater, after the economic fall of 2020 from which many economic agents have not been able to get out, because their government did not throw them a rope to help them in their survival.

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Enrique Campos Suarez

Televisa News Anchor

The great Depression

Degree 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 Anahuac University.

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

He is a specialist in economic-financial issues 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 Programas de México, where he participated in VIP business radio. He was also part of the management and talent team of Radio Formula.

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