Mexican GDP Forecast Increased

The International Monetary Fund (IMF) had calculated that in 2021, Mexico’s GDP would see au growth of 4.3 percent. In the latest forecast, however, there was an increase and now it is believed that there will be a growth of 5 percent. 

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, as reported by El Economista. At the moment, Mexico, along with Costa Rica and Brazil, are seen as the Latin American countries where growth will not depend mostly on the trajectory of the pandemic since they have secured enough vaccines for their entire populations, according to Forbes. 

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 is expected to be at 3 percent and it will continue decreasing toward 2026 when the growth rate will be 2 percent. These next growth rates fall short of the average growth that the Mexican economy recorded between 2003 and 2012, which was 2.2 percent. However, they counter the 8.2 percent drop recorded in the year of the pandemic.

The economic rebound of Latin American countries depends on the continuation of monetary and fiscal policies. “An early removal of stimuli could flunk recovery,” mentions Alicia Bárcena, Executive Secretary of the Economic Commission for Latina America and the Caribbean (ECLAC) in a previous MBN article. It has been stated that there are concerns regarding this sort of stimuli, specifically regarding foreign direct investment (FDI). In a previous MBN article, it was stated that 40 percent of participants are concerned about the investment that will come to Mexico due to the Mexican government’s decisions. This statement comes from the most recent BofA Securities survey and even though there is an improvement in this year’s GDP forecast, the years to come are still shrouded in economic uncertainty. 

Regarding the global economy, IMF forecast that growth will be of 6 percent in 2021, which represents an increase over the expectations of three months ago when it was said that it would be 5.5 percent. The improvement is largely due to the unprecedented responses of large central banks and governments to the COVID-19 pandemic, as mentioned in the Forbes article.