The Mexican economy is growing despite a bleak environment of geopolitical conflicts and inflation. The Gross Domestic Product (GDP) of Mexico registered a growth of 3% in 2022 compared to the level reached the previous year, according to figures from the National Institute of Statistics and Geography (Inegi), which indicates a recovery after the global drop in growth due to the covid-19 pandemic since 2020.
By sectors, industrial activities were the ones that grew the most in 2022, with an annual increase of 3.2%, while agricultural work registered a growth of 2.8%. The service sector grew 2.7% last year compared to 2021.
In the last quarter of 2022, GDP registered a growth of 0.44% compared to the third quarter of the same year. In the same period, the GDP of primary activities registered a growth of 2.03%, while industry and services grew 0.36% and 0.16%, respectively.
Last year, inflation was the biggest short-term economic challenge, with the consumer price index averaging a year-on-year growth rate of 7.89%, peaking at 8.7% in August and September. The highest price rise in the last two decades has led the Mexican central bank to raise its interest rates to unprecedented levels to curb inflation. Currently, this reference rate is above 10.5%.
The director of analysis of Banco Base, Gabriela Siller, explains that the impulse of the economic activity came from abroad, from the growth of exports and direct foreign investment, due to the opportunity of nearshoring, as well as the arrival of remittances that supported domestic consumption. Other factors that helped growth were fewer disruptions in supply chains and fewer semiconductor shortages.
The Mexican economy even performed better than its neighboring country to the north. The Gross Domestic Product (GDP) of the United States grew by 2.9% at an annualized rate in 2022. The rise in interest rates in that country has slowed down some sectors (construction and home purchase), but has not caused the dreaded recession that many economists were predicting.
For 2023, market expectations point to a slowdown in growth in Mexico, which would be in a range of 0.3% to 1.8%, according to the most recent Citibanamex survey. The World Bank also has an estimate of 0.9% growth this year; while the International Monetary Fund forecasts an advance of 1.7% for Mexico.
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