Warning of weak growth in the first year of government

Businessmen point out that a downward economy persists in national and international specialists; They recommend seeking to attract more FDI to the country.

So far, the perception of national and international specialists consider that the balance of risks has deteriorated, causing growth expectations to be adjusted downwards.
So far, the perception of national and international specialists consider that the balance of risks has deteriorated, causing growth expectations to be adjusted downwards.

Factors such as the cancellation of the New Mexico International Airport (NAIM), the strategy against fuel theft, the rise in the interest rate, among other external factors, could reduce economic growth more than usual in a first year of government , warned the Center for Economic Studies of the Private Sector (CEESP).

In its weekly report, the business organization mentioned that there is a risk that a drop in the economy will be reported, which will be reflected in the evolution of the Gross Domestic Product (GDP) for the first quarter of the year.

The above is based on the fact that the Bank of Mexico (Banxico) may follow a policy of increasing interest rates in response, on the one hand, to the dynamics of the Federal Reserve and, on the other, to prevent internal inflation from continuing. rising, especially when it is feasible that the exchange rate weakens throughout the year.

"Although the first year of each sexenio shows less dynamism given the process of adaptation of the new government team and business caution in the face of changes in economic policy, it is clear that this time the weakening will be greater."

The CEESP recalled that during the past week Bank Of America corrected its growth forecast for Mexico from 2.0 to 1.0 percent for 2019. Until just a few months ago the forecasts anticipated that the Mexican economy would grow slightly above 2.0 percent.

Given this new estimate, the reaction of the new government was not made to wait to point out that these estimates were not serious, since "the Mexican economy will grow 2.0 percent in the year".

However, it should be borne in mind that macroeconomic forecasts depend on the evolution of various variables, so that, depending on their behavior, the estimates can be corrected upwards or downwards.

So far, the perception of national and international specialists consider that the balance of risks has deteriorated, causing growth expectations to be adjusted downwards.

However, the evolution of some internal macroeconomic variables and the complexity that has been perceived of the situation of the world economy, especially the economy of the United States, which is the main trading partner, generated a more cautious environment among the experts

According to the results of last December's survey conducted by the Bank of Mexico, the average GDP growth forecast for 2019 was 1.89 percent, after an advance of 2.15 percent was anticipated in October. .

Likewise, the consensus of the IMEF survey of January of this year also shows a downward adjustment when anticipating a growth of 1.7 percent, after which in October the forecast was 2.0 percent.

Regarding the external environment, the greatest attention is placed on the behavior of the United States economy. After that, in 2018 it reported a growth close to 3.0 percent, largely driven by the implementation of Trump's tax policy in terms of tax reduction.

In this sense, it is expected that its dynamism will decrease given the restrictive monetary policy estimated, due to the intention of the Federal Reserve to continue, albeit more moderately, with the rise in interest rates.

They also highlight issues such as the effect that the partial closure of the government and the process of the approval of the Trade Treaty between Mexico, the United States and Canada (T-MEC) in Congress can generate.

Likewise, it is anticipated that the pace of growth in Europe will continue to decline, given the uncertainty of the business sector in the face of the prevailing political activity, on issues such as Brexit, the situation in France and Germany.

However, the strategy against petrol theft increased the concern of the markets, since it is very important to accelerate the supply of fuel, improve security and create an environment of trust by strengthening the rule of law, all with In order to stimulate productive investment and build an image of a country that is safe and respectful of the rules of the game.