This Week the Mexican Economy Takes a HitBy Sofía Hanna | Thu, 08/19/2021 - 15:45
This week, real estate platform Lamudi reported that the industry in Mexico could grow in 2021 and 2022. Sr. Pago’s Enrique Marú discussed the importance of achieving a sustainable future, given the environmental circumstances of 2020 and the pandemic. Meanwhile, Mexico’s industrial production could face difficult times in the coming months as a result of the disruption caused by COVID-19. Finally, the Mexican peso suffered a 0.49 percent depreciation on Tuesday due to global events that affected investor confidence.
Interested in more? Here are the week’s major headlines in Finance!
- Lamudi released its analysis of Mexico’s real estate offering and forecasted a 3.5 percent growth in transactions during 2021 and further growth of 2.5 percent in 2022. However, the report also states that structural changes are necessary to adapt the current product offering to the new needs of the end customer, which include more suitable spaces that prioritize ventilation and natural lighting. Regions such as the State of Mexico, Queretaro or Merida should be taken advantage of, reads the report, since they are experiencing strong momentum in their real estate demand. The real estate market is expected to keep moving thanks to the credit tools that authorities and banking institutions are generating to revitalize the country’s economy.
- Enrique Marú, Chief Revenue Officer at Sr. Pago, discussed the importance of a sustainable future in a contribution piece. Marú mentioned that during its early days, the pandemic generated the largest drop in CO2 emissions in history. However, the pandemic also increased the use of different types of plastic to address health issues, such as masks. Consumption in times of COVID-19 also went from physical to digital in a very short time, which helped boost e-commerce and rescued hundreds of small businesses that were more susceptible to bankruptcy by enabling new sales channels to generate income even with their doors closed. Today, over 92 million individuals make purchases online or use social networks and streaming services, so Marú urges users to push brands to adopt a more environmentally friendly posture.
- Mexico’s industrial production faced a challenging June, with troubles ranging from supply disruptions to the growth of COVID-19 cases. This points towards a stagnation of Mexico’s economic recovery, warn analysts from Banorte, which could continue throughout the rest of the year. Performance is expected to decline as the industry fell 0.5 percent month over month, adding to the deterioration in global virus conditions since the end of May. Industrial activity is 3.4 percent below the level of February 2020, before the pandemic. Construction was the weakest sector falling by 2.0 percent and nearly erasing the 1.5 percent growth of the previous month. Mining fell by 0.8 percent after two months of gains. Finally, manufacturing fell by only 0.1 percent, but this is its third consecutive month in contraction.
- The Mexican peso depreciated 0.49 percent on Tuesday in the face of surging COVID-19 cases, disappointing global economic performance and political turmoil in Afghanistan. Collectively, these factors stand to jeopardize a presumptive global economic comeback. According to Banxico, Mexico’s central bank, the exchange rate closed at 20.0250 units, up 0.097 units from Monday, equivalent to a local currency loss of 9.70 cents. The Dollar Index (DXY), which compares the currency against six reference currencies, gained 0.54 percent at closing due to economic and geopolitical risk perception. Furthermore, the US’s withdrawal from Afghanistan that let the Taliban take control of the country has also drawn caution from investors. In consideration of these unfolding events, investor uncertainty is understandable and palpable.