The Mexican Institute of Finance Executives ( IMEF ) warned this Tuesday that 2023 will be a turbulent year for the country’s economy, so much so that it could face a recession.
Alejandro Hernández Bringas, president of the institute, explained that due to the economic slowdown in the United States, exports and remittances from Mexico could be affected and the impact on the latter will also slow down domestic consumption.
“The slowdown scenario is entirely possible and I think we are on the verge of a recession. I believe that between this slowdown and a recession.”
In addition, another external factor that will cause uncertainty in the international and national context is the new outbreak of COVID-19 cases in China and the geopolitical tension between Russia and Ukraine.
“While in the country, there are situations such as an environment of insecurity, lack of investment and respect for the rule of law”
Hernández Bringas assured that there is a constant concern in Mexico related to political decisions that cloud the business environment, such as the approval in Congress of various measures that modify the electoral regulation or called Plan B, as well as recently air cabotage in the country.
“All of this considerably complicates the operation for Mexican companies, losing the opportunity to obtain benefits for national consumers if they are negotiated symmetrically with other countries.”
According to the monthly IMEF expectations survey, the Mexican economy will grow by 3 percent in 2022, creating 735,000 formal jobs registered with the Mexican Social Security Institute ( IMSS ).
However, he said that the rate of Gross Domestic Product ( GDP ) will not grow next year, since it will end at 1.2 percent and there will only be 418,000 jobs created in the Mexican economy.
“Although the forecast for GDP growth improved marginally, from 1.1% in the November survey to 1.2% in the current one; continues to represent a sharp slowdown from the 2022 estimate.”
On the other hand, he mentioned that inflation will be one of the main risks for the country since January and February will be key months to detect if the increase in the minimum wage approved for the year is transferred by the companies or not to the final prices for the consumer.
The IMEF survey estimates that at the end of this year, inflation will be at 8.4 percent and drop to 5.1 percent at the end of 2023.
