Analysis on Mexican Economy / US-China Tensions

Analysis on Mexican Economy. President Andrés Manuel López Obrador stated that the analysis about the Mexican economy reported by the Centre for Economic Studies of the Private Sector (CEESP) is “biased” and looking to discredit his administration.

López Obrador said that the investigation seeks to attack his government and pointed out that it does not consider international factors such as the COVID-19 pandemic and the Russian-Ukrainian conflict.

According to the CEESP, three main factors will limit economic growth and hinder an adequate forecast of the economy. Experts informed that the future of the Mexican economy has a complex projection.

Based on previous economic analysis of the entity, the first factor to limit economic forecasts is the lack of investment. Despite investment increase from 2020 to 2021, total investment in 1T22 reached only 18.1 percent from the 25 percent goal.

Moreover, high inflation rates could continue until 2024 and according to analysists this will also obstruct the projection. The forecast of the Bank of Mexico (Banxico) shows that inflationary pressures could reach the 3 percent goal estimated for the first trimester of the present year, said the CEESP. Inflation will have direct effect on attracting investment and consumer behavior since consumer prices increased 0.43 percent during the first two weeks in July. 

The third factor that will limit Mexico´s economic growth is the slowdown in the US´ economy says the CEESP. During the 2T22, the US had a 0.9 percent economic decrease on its annualized rate. This marks a second consecutive semester with a downward trend, according to the US Trade Department.

The analysis stresses that Mexico needs to change its attitude towards investment to have a better economic development. López Obrador’s administration has been criticized for hampering investment due to reforms with nationalistic tendencies.

US-China Tensions. President López Obrador said that the tensions between US and China also affect Mexico. Moreover, he mentioned that the conflict can impact food supply because trade and job creation will cease.

Amid the growing tensions between China and Taiwan and US House of Representatives Speaker Nancy Pelosi’s visit to the island, the Mexican president recognized that the conflict in Asia also has an impact on the economy of the country and made a call to avoid confrontation. Furthermore, he urged the United Nations to address the matter and harmonize the countries. López Obrador considered Secretary General of the United Nations Antonio Guterres, Prime Minister of India Narendra Modi and Pope Francis to be the most suitable actors to moderate the issue.

MORENA Candidate for State of Mexico. President López Obrador celebrated the nomination of Delfina Gómez, Head of the Ministry of Public Education (SEP), as the MORENA candidate for Governor of the Estado de Mexico.

The party presented last Thursday the results of the internal surveys to choose a candidate to be governor of the State of Mexico in which Delfina Gómez won with 25 percent of the votes. The Minister of Education competed against senator Higinio Martínez, Ecatepec Mayor Fernando Vilchis and Horacio Duarte, Head of the National Customs Agency of Mexico (ANAM).