War in Ukraine Adds to Mexico’s Economic Insecurity
The growing geopolitical conflict resulting from Russia’s invasion into Ukraine has exacerbated uncertainty surrounding Mexico’s economy, the Mexican Institute of Finance Executives (IMEF) said on Tuesday, March 15.
In its monthly analysis, the private-sector IMEF said that the global economic landscape changed notably due to the Russia-Ukraine conflict, the impact of which is still to early to gauge.
IMEF members thus downgraded Mexico’s economic growth forecast for the year from the 2 percent projected in February to 1.9 percent.
Meanwhile, the analysis pointed out that the Mexican economy is also affected by a combination of negative internal factors, such as declining economic activities, rising inflation and a huge deficit shown by the latest trade balance figures.
A recent rise in crime is dragging the economy as well, the IMEF said, because it undermines the rule of law and further disturbed a virtuous circle of trust, investment, employment and growth.
The institute added that the adverse environment could lead the current administration to make cuts and adjustments in spending in the coming months.
Mexico’s economy, the second-largest in Latin America after Brazil, grew by just 4.8 percent in 2021, after plunging 8.2 percent in 2020 due to the covid-19 pandemic, according to the National Institute of Statistics and Geography (Inegi).