Economists play down risk of recession for the Mexican economy

The economy of Mexico shows signs of a slowdown, which will lead the country to growth levels lower than last year, which was 2 percent.

Analysts agree that the slowdown is due to the start of a new government administration, which is common to see since the new government is adopting, but also at a slower pace of growth of the global economy.

Mario Correa Martínez, the chief economist at Scotiabank Mexico, believes that the weak economic performance is due, in part, to the change that has taken place in the structure of the Mexican government after the start of the new administration, as of December 1, 2018.

He pointed out that whenever there is a change of government there is a “normal economic slowdown” and a “learning curve”, although in this case, it seems that the effect will be more pronounced. This occurs because of the important changes that are taking place in the government structure, both in state ministries and in the cut applied to the salaries of senior officials, which generated a great outflow of human capital.

“All this, very likely, will generate a greater impact than we have seen in previous changes of administration, but that is a temporary issue,” said Correa Martínez.

The national president of the Mexican Institute of Finance Executives (IMEF), Fernando Lopez Macari, agreed that there is no accelerated deterioration of the national economy, but a low activity associated with the entry of the new government and the curve of learning of current officials.

“We have not noticed anything in the Mexican economy that leads us to think that a longer slowdown is coming. What we do see is a slowdown in the global economy and the possibility of a deceleration in the United States that, if materialized, could have an impact in Mexico,” he said.

Added to this is the concern about a possible delay in the approval of the new trade agreement between Mexico, the United States and Canada (T-MEC). For now, the IMEF has maintained its growth forecast for the Mexican economy for the third consecutive month at 1.5% in 2019, and for the second time at 1.8% for next year.

Director of Economic and Financial Analysis of Banco Base, Gabriela Siller Pagaza, denied that the economic situation of the country deteriorates in an accelerated manner, and although in the first quarter there will be zero economic growth, in the second there will be a rebound.

“Anyway, for all 2019 a slowdown is anticipated,” he said, referring that Banco Base maintains its 1.3% growth estimate for the entire year, from 2.0% in 2018.