The International Monetary Fund (IMF) increased its estimate of economic growth for Mexico during 2022, going from 2 to 2.4 percentrevealed the July World Economic Outlook (WEO) report.
In the previous report released in April, the organization had considerably cut growth expectations for the Mexican economy, going from 2.8 to 2 percent, so during this update it recovered some of the lost ground.
However, the IMF was tough on expectations to 2023as it went from an estimate of 2.5 to 1.2 percentwhich meant a ‘snips’ of 1.3 percent.
Four other countries also received upward adjustments in their growth forecasts for this year, including Russia (from -8.5 to -6 percent), Italy (2.3 to 3 percent), Brazil (0.8 to 1.7 percent ) and South Africa (1.9 to 2.3 percent).
However the forecast for world economy suffered a cut of 0.4 percent, since, in April, the IMF estimated a global growth of 3.6 percent, while now it thinks that the expansion will be only 3.2 percent. For 2023, a downward adjustment of 0.7 percent was made to remain at an average of 2.9 percent.
The organization argued that the world economy has suffered several shocks since its last review, which caused them to be less optimistic about this indicator.
“Higher-than-expected inflation around the world, especially in the United States and major European economies, which has triggered tighter financial conditions; a worse-than-anticipated slowdown in Porcelainreflecting the COVID 19 outbreaks and lockdowns; and other negative side effects of war in ukraine”, can be read in the report.
The country that plummeted the most in its growth expectations was the United States, since, in April, the IMF thought that the US economy would grow by 3.7 percent, however, now it thinks that it will only grow by 2.3 percent.
“The lower growth at the beginning of this year, the reduction in the purchasing power of households and a monetary politics More strict prompted a downward revision of 1.4 percentage points in the United States,” the IMF explained.
China did not do well either, since the IMF applied a reduction from 4.4 to 3.3 percent.
“For China, new confinements and the deepening of the real estate crisis have caused growth to be revised downwards by 1.1 percentage points, with important contagion effects at the global level”, the report underlined.
On the other hand, the world inflation revised upwards due to food and energy prices, as well as persistent supply-demand imbalances, and is forecast to reach 6.6 percent in advanced economies and the 9.5 percent in emerging market economies.
“With rising prices continuing to drive down living standards around the world, controlling inflation should be the first priority for policymakers. Tighter monetary policy will inevitably have real economic costs, but delay will only exacerbate them.
Too much optimism: experts
Ernesto O’Farrill, president of Grupo Bursamérica, indicated that this estimate for Mexico is somewhat optimistic, since INEGI has just revealed through IGAE that local economic activity contracted by 0.2 percent in May.
In his opinion, the GDP of our country would grow this year only 1.5 percent, and next year could see a recession, predicting an economic contraction close to 1 percent, and which is considerably far from the IMF estimates.
“It is being seen as a highly probable scenario that the United States will fall into a recession next year, and therefore Mexico would also go into a recession. Our estimate for this year is an advance of 1.5 percent, but for next year we are already estimating a fall of 1 percent”, she added.
Carlos González, director of analysis at Monex, also agreed that the IMF’s projections are optimistic, and added that, even with these estimates made by the international organization, it is worrying that Mexico is one of the few countries that has not yet returned to the productive levels seen before the health crisis caused by Covid-19 and its variants.
“It is very unfortunate, because most countries are already at pre-pandemic levels; It is likely that we will not have this full pre-Covid recovery and we are already in a scenario with a high probability of falling into a recession, it is very worrying, ”he added.
Those who will grow less
In Europe, several countries suffered cuts, such as Germany, which is expected to grow 1.2 percent (-0.9 points less than the previous report),
For France, it is estimated that its economy will grow 2.3 percent (0.6 points less) while for Spain an expansion of its economic activity of 4 percent (0.8 points less) is expected. The United Kingdom was not spared either, as expectations went from 3.7 to 3.2 percent.