The World Bank has adjusted its growth forecasts for the Mexican economy in 2022 and 2023, offering a slightly rosier outlook for this year but a more pessimistic prediction for the coming one.
In a report published Tuesday, the World Bank forecast growth of 1.8% this year, an increase of 0.1% compared to its outlook in June. It anticipates GDP will expand 1.5% next year – a reduction of 0.4% compared to its previous forecast – and 2.1% in 2024.
The World Bank is forecasting 3% growth across the Latin America and Caribbean (LAC) region this year and a 1.6% expansion in 2023.
“By the end of the year, economic activity will have largely recovered to its pre-pandemic levels, although with substantial variations across [LAC] countries,” the international financial organization said in its report titled New Approaches to Closing the Fiscal Gap.
“Among the largest economies, GDP in Chile and Colombia is expected to be 10% above 2019 levels, while in Brazil and Mexico it remains unchanged.”
The Mexican economy slumped by more than 8% in 2020 due to the pandemic and associated restrictions before recording almost 5% growth last year.
The World Bank said Tuesday that “strong global uncertainty as a result of the war in Ukraine, higher interest rates in developed countries and the persistent inflationary pressures will impact economies in the region.”
“… Inflation, while for most countries is at OECD levels, will require continued efforts to reduce to previous target levels,” it said.
Presenting the LAC report on Tuesday, the World Bank’s chief economist for the region, William Maloney, noted that inflation in Mexico is high: 8.76% in annual terms in the first half of September. But he expressed support for the central bank’s efforts to combat the unwanted phenomenon.
The Bank of México lifted its benchmark rate by 75 basis points to 9.25% last week, the highest level since a new monetary policy regime was introduced in 2008, after two previous 0.75% hikes.
Maloney noted that the World Bank is not forecasting an economic contraction in the United States despite the Federal Reserve’s aggressive rate hikes in that country, but warned that if the world’s largest economy does go into recession there will be an impact on all other nations in the region, including Mexico.