Nearshoring and the possible recession in the US will define the Mexican economy

The use of the relocation of the Value chains in Mexico (nearshoring), greater physical investment and the possible recession of USA they will define the future of the Mexican economy in 2023, specialists agree.

Uncertainty surrounds Mexico’s economic outlook for this year after revealing its 3% growth in 2022 on Tuesday, a figure that the Mexican government hopes to repeat, while there is a lack of consensus among analysts and organizations, which They project growth of between 0.3% and 1.8%.

According to the most recent Citibanamex survey of private analysts in the financial sector, the lowest forecast for 2023 is the 0.3% estimated by Oxford Economics, Bank of America and BNP Paribas.

On the contrary, the highest forecast for the current year is from the Multiva financial group with 1.8%, followed by the consensus of 1.7% from the GBM financial platform, the Masari brokerage house and Banco Base.

However, The Mexican government maintains the expectation of repeating the 3% expansion it obtained in 2022with a scale that goes from 1.8% to 3%.

The optimism of President Andrés Manuel López Obrador has come to estimate that this will be repeated for the next two years, when his term ends.

However, international organizations have also questioned the high forecasts of the Mexican government, such as the International Monetary Fund (IMF), which this Monday updated its forecast up to 1.7% for the Mexican GDP.

Meanwhile, other organizations such as the Organization for Economic Cooperation and Development (OECD) forecast an advance of 1.6% in their most recent projectionwith a less encouraging outlook in the case of the World Bank, which anticipated a rise of 0.9%.

Nearshoring, an opportunity to grow

The analysts consulted commented that the phenomenon of nearshoring It presents an opportunity for Mexico that, if capitalized, will lead it to exceed all growth forecasts, although it is not the only factor.

Eduardo Osuna, general director of BBVA Mexico, considered that the relocation of value chains will be a “important component of future growth”although he ruled out that it will be the “lifeguard of Mexico”.

Osuna pointed out that the greatest positive impact for the Mexican economy will come from greater national private investment, especially in infrastructure.

“When we look at the aggregate demand of the country, it has a greater impact in terms of future growth and potential growth capacity”he detailed.

For his part, Carlos Serrano, chief economist at BBVA, explained that another slowdown factor will be linked to the possible recession in the United States, although he acknowledged that they will revise their forecast upwards soon given a more encouraging outlook in that country. where more than 80% of Mexican exports go.

“To the extent that the United States can slow down less than anticipated, Mexico will grow more than anticipated”narrowed.

The slowdown is here

The director of Economic and Financial Analysis of Banco Base, Gabriela Siller, indicated that the figures of the economic behavior of Mexico already indicate a slowdown that will extend to 2023, therefore, its central scenario remains at 1.7%, in line with the IMF.

The Tec de Monterrey academic also added that it will be in the first quarter of 2023 when a complete recovery of the Mexican economy will be seen in the face of the contraction of 8.2% in 2020 due to the covid-19 pandemicsince he assured that the advance of 2022 is still “a rebound effect”.

Likewise, Enrique Covarrubias, Actinver’s chief economist, shared that although the growth forecasts for 2023 “they are very varied”the economy will have two “determinants”.

The first is the recession in the United States, which is expected to be less aggressive than expected, “given its high commercial integration”and the other is a phase “very unexpected, but at the same time very favorable”which is the “nearshoring phenomenon”.

In this vein, he concluded that the investments will depend on whether the players believe that “Yes, there is an effect in which the Mexican economy is winning over the slowdown in the United States”.

Source: EFE