The next recession – El Financiero

The next recession – El Financiero

Available indicators predict that the economic recovery in Mexico will resume in March and April, after the recession recorded in February.

The Index of Economic Activity (IOAE), published Thursday by INEGI, suggests a monthly growth of 0.4 percent for the economy in April, after 1.1 percent in March.

Secondary activities – industrial – would have grown by 0.5 percent in April, after a 0.3 percent advance in March, while the third activities – trade and services – would have seen a monthly expansion of 0.4 percent, compared to 1 percent from the previous Month.

Both activities are the main drivers of economic activity growth in Mexico.

The industrial sector is doing well in the face of a “pull” from the US, thanks to the growth of its economy, although many indicators show it is slowing.

Trade and services benefit from accelerating domestic demand as private consumption He continues to recover, so much so that in February not only did he have eight consecutive monthly increases, but also Restored to pre-pandemic level.

On the contrary, investment has not shown any improvement and remains weak, highlighting the poor performance of construction investment spending.

This week, the Mexican Institute of Financial Managers (IMEF) stated that Political and security environment in the country keep giving birth “Plus interest What confidence, at the expense of investment and economic activity.

The above is combined with Inflation problemWhich is considered the most important at the moment, “significantly limits the prospects for economic growth for this year and next.”

First thing on Wednesday, INEGI will publish revised GDP growth numbers for Mexico for the first quarter of 2022.

The GDP estimate, published at the end of April, showed, in time, a growth of 0.9 percent compared to the previous three months.

If what the IOAE expects, an generally accurate indicator, is confirmed, the revised data would show quarterly GDP growth of up to 1.6 percent in the January-March period, despite the effects of an increase in omicron variable infections in the first month of the year.

This, after economic activity in Mexico fell 0.9 percent in the third quarter of 2021 and stagnated in the last quarter of that year.

According to IMEF, the latest indicators are giving mixed signals about the economy’s performance in an “environment of high uncertainty that maintains a deteriorating trend”.

Mexico’s Economic Prospects of financial executives loweredGDP growth forecasts are slightly lower for this year and next.

The forecast survey for May revised the growth forecast for 2022 from 1.8 to 1.7%, as well as the forecast for 2023 from 2.1% to 2%.

But there is also a file Sharp upward revision in inflation estimate For the year, which rose from 5.9 percent in the April survey to 6.8 percent in May.

for this reason The country’s financial executives warn of stagflation scenarioWith economic activity stagnating, investment remains low, and inflation is at its highest level in two decades.

The Mexican economy is not only facing a stagflation scenario, but according to IMEF, Risks entering a recession In 2023 due to uncertainty about the United States, Mexico’s main trading partner.

Analysts at Wall Street investment banks see a growing possibility of a recession in the US economy, as inflation has reached levels not seen in more than four decades.

They fear that a rate hike by the Federal Reserve could push the economy into recession.

The problem is that stagnation It could jeopardize our stability Economic and financial, which should never be taken for granted.

The worrying thing is that in Mexico The warning message is clear by its absence This should be heard at this time given the challenges posed by the current economic situation.

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