The Secretariat of Finance (SHCP) is clinging to its forecast of 2% growth in 2020 despite a market consensus that the economy will expand by barely 1%.
“We’re going to maintain the expectation of 2%. Analysts have made revisions, which are based on historical information. . .but at the Finance Secretariat we have greater access to other kinds of information and we have an operating margin that allows us to strengthen economic growth,” SHCP undersecretary Gabriel Yorio told reporters on Friday.
The forecast is double that of the International Monetary Fund, which cut its 2020 growth outlook to 1% this month from 1.3%, and 0.8% above the World Bank’s prediction, slashed from 2% to just 1.2%.
The SHCP announcement comes the day after the national statistics agency Inegi announced that GDP had contracted by 0.1% in 2019, the first decline since 2009, the year of the world financial crisis when GDP fell 5.3%.
Yorio said that another reason why the finance department was maintaining its 2% growth forecast is that it is working with a new initiative called the economic growth cabinet to overcome the obstacles that hinder greater investment.
Presented by President López Obrador on Wednesday, the growth cabinet is headed by his chief of staff, Alfonso Romo, and is collaborating with the secretariats of the Economy, Communications and Transportation, the Environment, and Energy.
Yorio said that the government would aim to speed up investment by bringing forward the tender process for some infrastructure projects.
“. . . for that we’re coordinating with Alfonso Romo. This will have an impact [on growth] . . .” he said.
In order for Mexico to reach the 4% annual growth that López Obrador has pledged to achieve during his six-year term, the undersecretary said that the structure of the economy needs to change.
“To grow by 4%, effectively we’re going to have to overcome a lot of obstacles. . . [We have to] undertake a range of reforms to improve the financial sector, broaden it and make it more flexible,” Yorio said.
Despite Thursday’s announcement that Mexico’s economy shrank last year, the official said that the SHCP doesn’t feel “morally defeated” and doesn’t believe that López Obrador’s inclusive growth strategy has to be changed.
“Public finances are healthy, they’re balanced. . .” he said.