Mexico’s Debt Forecast ReleasedBy Sofía Hanna | Thu, 04/08/2021 - 16:33
The International Monetary Fund (IMF) announced that Mexico’s debt could increase to over 60 percent of its GDP between 2021 and 2026. This forecast was done taking into consideration debt levels from the federal government, state governments and local governments. In 2020, Mexico’s debt reached 52.4 percent of the Mexican GDP, a historic number that is 7 percentage points higher than 2019’s 45.1 percent.
After this, Mexico and Argentina urged the IMF and the World Bank to create new mechanisms for debt relief for middle-income countries and also called for the creation of a specific fund to support middle-income countries to restructure or improve their finances. "This could prevent the health and economic crisis from becoming a debt crisis in the medium-term, allowing a vast majority of the world's population not to transition into the forgotten majority," reads the joint statement from Argentina and Mexico, published on Twitter by Arturo Herrera, Deputy Minister of Finance and Public Credit of Mexico.
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- IMF also released its expectations for the Mexican GDP announcing growth of 5 percent, up from its previous 4.3 percent growth forecast. The reason for this change is due to the positive impact of external demand, the improvement of the US economy’s performance and the advances in vaccination efforts. Although a 5 percent growth rate is high and was last recorded in the 1970s, according to the World Economic Outlook (WEO), next year’s GDP growth is expected to be at 3 percent and it will continue decreasing toward 2026 when the growth rate will be 2 percent.
- Mexico recently overtook China as the US’ main trade partner according to the census bureau. It was estimated that the exchange between Mexico and the US was US$96.9 billion, representing 14.9 percent of the US’ total trade. Mexico recovered this spot after being displaced by China as the US’ main trade partner in September 2020.
- Fernando De Obeso, CEO of Salud Fácil and an MBN Expert Contributor, shared the most common mistakes in financing a small to medium-sized hospital or clinic (SMH). The main pitfalls he mentioned were not having reliable financial statements or accounting information, using debt to finance the start of the SMH and not having a finance person.