The short-term outlook for the Mexican economy, after knowing the timely estimate of first-half GDP, is positive and even led to upward revisions in the forecasts of Banco Base, Goldman Sachs, Oxford Economics and Pantheon Macroeconomics.
But they limit that the second semester scenario is biased downward and risks persist in the health context, as a result of the third wave of Covid-19 and unconventional policies of management, inflation and rates.
International business advisory firms Pantheon Macroeconomics and Oxford Economics have the highest GDP forecasts at 6.5%, but warn of downside risks.
Andrés Abadía, chief economist at Pantheon Macroeconomics, explains that as long as external conditions remain strong, they will continue to support economic activity in Mexico, boosting consumption thanks to a strong influx of remittances.
However, it believes that industrial activity will continue to be under pressure due to supply problems.
Consulting firm Oxford Economics has warned that Mexico’s reluctance to implement new restrictions due to Covid-19 could affect the pace of recovery. His previous forecast for gross domestic product was 6.2 percent.
Both agree with Banco Base’s director of economic and financial analysis, Gabriella Seiler, who also stressed the “important risk the country faces in trade tension with the United States.”
The baseline scenario for annual growth in 2021 is 6.3%, a rate that includes a forecast of 0.35% advance in the third quarter and 0.45% in the last quarter, which is considered a “modest recovery.”
The expert adds an additional factor to this scenario: public policies that will continue to discourage access to productive and financial capital. The previous forecast, just revised in June, was 6.2 percent.
In addition, Goldman Sachs’ Latin American economist Alberto Ramos slightly revised his growth forecast to 6% from 5.9% previously and noted the current context of escalating Covid-19 cases, high inflation and an expected increase in rates. As factors that can slow recovery.
Back to normal
All strategists acknowledge that since the US is the only driver of Mexican activity, the economy is still vulnerable to moderating its performance.
Seller estimates that starting in 2022, GDP will return to a growth rate of 2% where half of the progress will be the result of the American impulse.
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