SHCP Reports Decrease in Public Debt During 4Q22

Mexico’s public debt stood at 49.4% of the country’s GDP during 4Q22, which represents a decrease from the forecasted budget for 2022 and 2021, reports SHCP. The ministry highlighted that the country’s public finances and resources have been managed responsibly. SHCP deemed Mexico’s level of debt as “stable.”

The variations from 2022 and 2021 stood at 1.6% and 1.4% points of the country’s GDP, respectively. The SHCP attributed the success to budget revisions and the subsidies on the Special Tax on Production and Services (IEPS), which was 1.5% greater than the budgeted GDP. 

The Mexican economy outperformed expectations in 2022, with an accumulating growth of 2.9% as of November, says SHCP. The results surpassed analysts’ expectations thanks to the good performance of the labor market, consumption and private investment, said the SHCP via a press release. 

In 3Q22, confidence in the Mexican economy surged with foreign direct investment (FDI) reaching US$32 billion, a level unseen since 2013. Mexico recorded its lowest unemployment rates in 17 years at the end of 2022, which stood at 2.8% overall and 2.5% for women, due to the creation of 2.4 million jobs during the year. Most of the jobs created were formal and improvements in working conditions allowed for a major contribution in private consumption, which accumulated a growth of 7.1% until October 2022, twice its historical average. 

In 2023, Citibanamex’s Survey of Expectations (ECE) forecasts that Mexico’s GDP could grow by 0.9% annually. This is a harsh decline in annual GDP growth, as the median forecast for 2022 GDP growth remained at 3.0%, as reported by MBN. 

Other analysts have drawn similar conclusions due to emerging challenges. "Given fragile economic conditions, any new adverse development, such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions, could push the global economy into recession," said the World Bank via its Global Economic Prospects Report, as reported by MBN.