IMF Raises Expectations for Mexico’s Growth

The International Monetary Fund (IMF) published its revised World Economic Outlook for July, highlighting that Mexico’s GDP is expected to grow 0.4 percent more than expected in 2022.

“For emerging markets and developing economies, the negative revisions to growth in 2022-23 reflect mainly the sharp slowdown of China’s economy and the moderation in India’s economic growth. Latin America and the Caribbean has also seen an upward revision of 0.5 percentage points in 2022 as a result of a more robust recovery in the large economies (Brazil, Mexico, Colombia, Chile),” reads IMF’s World Economic Outlook Update, July 2022.

The World Economic Outlook Update registered that Mexico’s economy fell 8.1 percent in 2020 after the global shock from the COVID-19 pandemic. However, it noted a vital recovery in 2021 of 4.8 percent in a major rebound for the country. For 2022, the outlook predicts a 2.4 percent increase, as the country slowly climbs towards its pre-pandemic numbers. Mexico is also expected to suffer a slow-down in 2023, as the update predicts a 1.2 percent increase.

Expectations for the Mexican economy in 2023 were discouraging, with July’s revision of the World Economic Outlook taking down projections for the country’s growth by 1.3 percent. However, quarter over quarter projections indicate that there is an expected increase of 1 percent.

“The baseline projection for global inflation is also more pessimistic, having been revised up to 8.3 percent in 2022 on a fourth quarter-over-fourth-quarter basis, from 6.9 percent in the April 2022 World Economic Outlook. For emerging market and developing economies, inflation in 2022 is expected to reach 10.0 percent on a fourth-quarter-over-fourth-quarter basis. Revisions for those economies display greater variation across countries, with larger revisions for Latin America and the Caribbean (up by 3.0 percentage points),” reads the update.

BBVA Research indicated that Mexico’s economy could slow down in 3Q22, as Mexico continues to focus on stabilizing the economy by rising interest rates and benefiting from unclogging in supply chain bottlenecks. BBVA Research also indicated that its bank’s experts dropped Mexico’s growth forecast from 2.1 percent to 1.6 percent for 2023, as reported by MBN.