Mexico’s Economic Recovery on the Right Track: IMF

After an economic contraction of 8.3 percent of its GDP during 2020, Mexico could see a 6.2 recovery by the end of 2021, according to the World Economic Outlook (WEO), a survey presented twice a year with expert opinions and analysis from economists of the International Monetary Fund (IMF). The report was published in October and notes several changes in the world’s economic forecasts.

So far, economists from IMF project a 4.0 percent growth in GDP for Mexico in 2022. The country’s economic recovery looks promising, especially because Mexico was one of the most affected worldwide among advanced economies, emerging markets and developing economies. Growth is set to slowdown in 2026, warns IMF, as the report shows an expected annual increase of 2.0 percent in GDP for that year.

“Current account balances are expected to narrow over 2022-2026, while global stocks of external assets and liabilities are anticipated to remain near historical heights,” reads WEO’s report. Mexico, which is grouped with other Latin American countries in this analysis, will suffer alongside Argentina, Brazil, Chile, Colombia, Peru and Uruguay from a global account balance.  However, these countries will maintain similar global international investment positions from 2021 to 2026, forecasts IMF, as the analysis shows that there is not going to be neither a decrease or a major growth from external financial sources.

Mexico’s consumer prices, which saw a small growth in 2020 of only 1.2 percent, will increase by 5.4 percent in 2021 and by 3.8 percent in 2022. Mexico’s unemployment rate is set to decrease for a third straight year in 2022, after registering a 4.4 percent in 2020 and a 4.1 percent in 2021 and is forecasted to fall to 3.7 percent in 2022.

Economic policy assumptions underlying the projections for selected economies show that in the case of Mexico, “The 2020 public sector borrowing requirements estimated by the IMF staff adjusts for some statistical discrepancies between above-the-line and below-the-line numbers.” After the severe impact Mexico suffered from the pandemic, IMF shows that there are some discrepancies for the year 2020 in borrowing requirements. However, considering that 2020 affected the global community and led many countries to look for financial aid, it is not uncommon to see irregularities in the general outlook of some countries’ finances. For 2021, 2022 and 2023, IMF estimated there will be a continued compliance with the rules stated by the Fiscal Responsibility Law.