Mexico’s GDP growth will slow in 2023, due to its greater exposure to the global economic cycle and lower demand from advanced economies, particularly the United States, according to OECD estimates (Organization for Economic Cooperation and Development).
According to their estimates, Mexico will grow 1.5% in GDP for next year, a rate six-tenths lower than the 2.1% forecast they projected in June.
This estimate is also less than the 3% that the government used as the basis for calculating next year’s budget revenues.
In its Interim Economic Prospects report, experts from the Organization for Economic Co-operation and Development revised up their forecast for Mexican gross domestic product this year, to leave it at 2.1% from the 1.9% they forecast three months ago. So the updated 2023 projection assumes a slowdown
They predicted that the moderation in economic activity would also be the result of tightening monetary policywhich will make it possible to gradually mitigate the rise in inflation gradually.
However, they estimate that next year inflation in Mexico It will post an annual variance of 4.9%, which is five-tenths above the forecast disclosed in June.
This forecast from the Organization for Economic Co-operation and Development is higher than the average forecast of financial institutions collected by the Citibanamex survey on September 20, which expects inflation to reach 4.70% levels.
For this year, the organization’s experts estimate inflation will register a variance of 7.9%, a perspective that contrasts with the 8.37% consensus of financial institutions surveyed by Citibanamex.
Inflation and monetary response
In the document presented in the early hours of Monday morning by the Secretary of the Organization for Economic Cooperation and Development, Matthias Kormannan approach to Latin American economies, to highlight that in the largest banks, such as Brazil and Mexico, central banks have already raised interest rates.
They predicted that this tightening of monetary policy, along with lower energy prices, could reduce headline inflation significantly in 2023.
In fact, they expected inflation in Brazil to close the year at 10.8%, a contrast that includes a 1.1 percentage point increase from the 9.8% forecast in June.
At the end of August, Brazil’s inflation rate was 8.8% annually, easing the rally since it was in July at 10.7% annually.
While the Brazilian interest rate reached 13.75% after 12 consecutive increases that started in March 2021 when the yield was at 2%. In fact, they were the first emerging central banks to raise interest rates.
while the The Bank of Mexico raised the interest rate to 8.50% in Augustwhile it was the tenth consecutive increase from 4% in April 2021.
United States, influence
The moderation of economic activity in Mexico will result from a deep slowdown in the United States, where they expect an advance of half a point of GDP in 2023, down from the 1.2% estimated three months ago.
Although they never talked about a file The risk of economic recession for the United Statesthey take inverted asset yield curves to say that it is an indication that markets usually correlate with economic stagnation.
According to the organization’s economists, the growth outlook for countries is dropping due to the uncertainty caused by the Russian invasion of Ukraine and the impact of tightening monetary conditions on economic activity.
The OECD forecast is the first update for international organizations in the last quarter of the year. In the second week of October, the World Economic Outlook (WEO) report was released for International Monetary Fund (International Monetary Fund) where they adjust economic forecasts. In April, economists at the International Monetary Fund forecast 1.2% growth for Mexico in 2023 and 2% for this year.