President López Obrador denied the economy was in recession despite two consecutive quarters of contraction in 2021, considered a technical recession.
From October through December, the economy contracted 0.08%, following a 0.43% decline in the previous quarter, the national statistics agency INEGI announced this week.
The president said job creation was proof enough of economic vitality. “In the case of growth it must be understood that the economy is growing. There can’t be any recession if in the month of January more jobs were created than in the last 20 years. What recession?” he said.
López Obrador also predicted 5% growth for the next three years, more than double the rate forecast by financial experts for 2022.
“Five percent [growth for this year] …. the experts and specialists are giving us at most 2.5% and I’m putting forward 5%. I have information and I’m also optimistic … 5% for 2023 and 5% for 2024,” he said.
The last time Mexico achieved two consecutive years of growth over 5% was 1996-97. Prior to that was in the early 1980s.
The president argued that growth in 2021 was impeded by COVID-19. “We are coming out of the crisis … that was what prevented us from reaching 6% growth, among other factors. But that stopped us and that’s why the average or estimate is 5% annual growth,” he said.
However, the president hinted that greater equality — rather than growth — might be of higher value, but assured that both were being achieved. “It may be that because of COVID we have less growth, but there is more equality. Now [resources] are reaching the poor more than before, we are living in a less unequal country than when neoliberal politics were applied, but we are also growing,” he said.
Whether or not the economy is in recession is a matter for debate: the deputy governor of the Bank of México, Jonathan Heath, cast doubt on the claim and a financial analyst at Banco BASE, Gabriela Siller, said the interpretation should be left to the independent working group under the Mexican Institute of Executive Finance (IMEF), which has yet to state its position.
Siller said that whatever the case, the picture was far from rosy. “We are going to lose a six-year term in terms of economic growth, where Gross Domestic Product (GDP) will only return to pre-pandemic levels in 2024,” she said.
Experts surveyed by the Bank of México revised their growth forecast to 2.2% on Tuesday and upped the predicted inflation rate from 4.16-4.27%. Last week, the International Monetary Fund (IMF) cut its growth forecast to 2.8%.
The 5% overall growth in 2021 followed an 8.4% contraction in 2020, while inflation in 2021 soared to 7.36%, the highest level in 21 years.