The Organization for Economic Co-operation and Development (OECD) and the Ministry of Finance have both upped Mexico’s growth forecasts for 2021, albeit by differing rates.
But both are cause for optimism: the OECD has raised predicted growth by 0.5% to 5% and the ministry expects growth of 6.5%, up from an April prognosis of 5.3%.
The OECD also expects Mexico’s GDP to grow by 3.2% in 2021, a rise of 0.2%.
The revised growth rates are largely the result of a lever effect from the United States, which is predicted to import more industrial goods, aided by a US $1.9-trillion rescue package. Mexican exports have already returned to pre-pandemic levels.
Deputy Minister of Finance and Public Credit, Gabriel Yorio, cited confidence in the vaccination program as a reason for the brighter forecast.
He added that the pandemic had revealed the vulnerabilities of an economy with a wide social gap, a large informal sector and barriers to digital assimilation.
The OECD addressed some of those social issues facing the economy in its recommendations. “Accelerating the vaccination campaign is crucial to reinvigorate the recovery. Greater income and training support would help the hardest-hit workers, both in the informal and formal sectors. Expanding access to childcare would facilitate female labor force participation … ” it said.
The report also stated the importance of boosting private investment by reducing regulatory barriers.
The OECD expects global GDP to grow 5.8% this year, up 0.2%, and to grow by 4.4% in 2022, up 0.4% on earlier forecasts. The United States’ US $1.9 trillion stimulus package could boost the GDP of Canada and Mexico by as much as 1%, and world GDP by the same rate.