By KELIN DILLON
According to Mexico’s autonomous National Institute of Statistics and Geography (Inegi) and its corresponding Timely Indicator of Economic Activity (IOAE), the Mexican economy slowed down at the end of 2022 as November’s reported .1 percent economic decline ended the nation’s previous four-month streak of positive economic growth.
November’s figures represent Mexico’s first economic decline since June 2022, when the economy dropped by .2 percent. However, it should also be noted that Mexico’s four-month positive economic growth streak from July to October never eclipsed the .1 percent mark month-over-month, revealed the IOAE.
Likewise, Mexico’s services sector – which represents more than half of the country’s gross-domestic product (GDP) – experienced its first decline since Oct. 2021 this November.
This decline in Mexico’s service economy must be watched vigilantly, economic expert and Tec de Monterrey Professor Héctor Villarreal told daily Mexican newspaper El Financiero, but does not indicate that Mexico’s economy will start on a bad foot in 2023.
“There will be a problem as interest rates continue to rise, as it is impossible for it not to hit consumers, construction, and credit, but I don’t see a collapsed start to the year,” said the professor, an opinion only bolstered by Mexican President Andrés Manuel López Obrador’s (AMLO) Dec. 19 announcement that Mexico will do away with the so-called “January slope” price hikes for the coming year.
But despite the anticipated decent economic start to 2023, the Mexican Secretariat of Finance’s (SHCP) optimistic economic estimates for the year are a far cry from the more conservative estimates made by the Bank of Mexico (Banxico). While the SHCP’s economic package predicts Mexico’s GDP to grow by 3 percent in 2023, Banxico instead estimates the Mexican GDP to grow by only .9 percent, or less than a third of the government’s estimates.
Similarly, Mexico’s GDP could be further impacted by the economic output of neighboring country and trade partner the United States, which is potentially facing a recession in 2023 that could subsequently have negative effects on Mexico’s industrial and manufacturing sector, leaving Mexico’s ultimate economic fate for 2023 up in the air.