Friday, June 14, 2024

Finance Ministry cuts 2022 growth forecast to 3.4%

The Finance Ministry (SHCP) has cut growth forecasts for 2022 to 3.4%, largely due to high global inflation rates.

The SHCP forecast growth of 4.1% in September, but revised that figure to 3.4% on Friday, and expects 3.5% growth in 2023. Inflation in Mexico hit 7.29% in the first half of March, while U.S. inflation hit 7.9% in February, a 40-year high.

The SHCP’s forecast is more optimistic than the Bank of México’s expectation. The central bank predicts 2.4% growth in 2022. Experts surveyed by the bank expect still lower growth this year, at 1.8%, a far cry from the 5% predicted for the next three years by President López Obrador in February. The last time Mexico achieved two consecutive years of growth over 5% was 1996-97. Prior to that was in the early 1980s.

The SHCP explained its revision by highlighting supply-demand imbalances due to the COVID-19 pandemic and Russia’s invasion of Ukraine, which exacerbated the inflation of food and raw materials prices and could cause shortages of materials for manufacturing and automotive production.

The SHCP said government infrastructure projects, the benefits of the United States-Mexico-Canada Agreement (USMCA) treaty, the minimum wage increase and government social programs were expected to help economic growth by strengthening the domestic market.

Finance Minister Rogelio Ramírez de la O.
Finance Minister Rogelio Ramírez de la O.

The SHCP also expects the price of oil to bolster the economy, which it estimates will average US $92.90 per barrel in 2022 and $61.10 per barrel in 2023. At the beginning of the year, a barrel was expected to average $55.10 per barrel in 2022.

The SHCP predicts inflation to average 5.5% in 2022 and 3.3% in 2023. It expects the peso to be valued at 20.7 to the dollar in 2022 and 20.9 in 2023.

Finance Minister Rogelio Ramírez de la O said Mexico’s dependence on exports exposed it to the unexpected volatility of global markets. Exports make up 40% of the Mexican economy, and “in that part we have had a negative impact that was not contemplated when we calculated the growth rate of 4%,” he said.

With reports from Milenio, El Financiero, and La Jornada 

Have something to say? Paid Subscribers get all access to make & read comments.
Jaguar surrounded by furniture and junk on a backyard patio at night in Cancun

Video of jaguar sighting in Cancún backyard goes viral

The video on social media shows the jaguar prowling a Cancún backyard patio at night and rummaging through the homeowner's belongings.

As heat breaks records in Mexico’s north, torrential rains pummel the south

Emergency officials across Mexico are dealing with both a northern heat wave with 50-degree-Celsius temps and heavy rains in the southeast.
Refugees displaced by an armed attack on their Chiapas town stand in the bleachers of a open air sports court and look at proceedings below through a protective wire fence

Over 4,000 residents flee Chiapas town following armed attack

Thousands in the Chiapas town who fled a June 4 armed attack by a criminal group refuse to go home until authorities can ensure their safety.