Mexico grew in 2022 despite an environment of uncertainty and inflation. The country’s economy grew 3.1% last year, slightly better than the 3% previously estimated by the National Institute of Statistics and Geography (INEGI). In the data published this Friday, the Gross Domestic Product (GDP) advanced 0.5% in the fourth quarter compared to the previous period. The performance of economic activity in the country was driven by industrial activities, which registered growth of 3.3%, a level not seen since 2010, mainly by the manufacturing sector.
Tertiary activities –where services are located and which contribute the most to GDP– grew 2.8% in 2022, better than the 2.7% initially estimated. While agricultural work registered a growth of 2.6%.
From last year to date, inflation has been one of the biggest challenges to overcome in the Latin American country. The consumer price index currently stands at 7.76% during the first fortnight of February, giving a slight breather after the rebound observed in the previous fortnights. However, the highest price rise in the last two decades has led the Mexican central bank to raise its interest rates to unprecedented levels to curb inflation. Currently, this reference rate is already at 11%.
Coincidentally, the director of analysis of Banco Base, Gabriela Siller, specifies that the revision of the GDP makes it evident that the economic growth of Mexico in 2022 was driven by the secondary sector, mainly by manufacturing where Mexico’s exports are located. . The specialist points out that it is still premature to attribute the national economic growth to the industrial relocation known as nearshoring. “This type of relocation of industrial activity is a gradual process, we could start to see some of it in 2023, but I think that it will be more decisive in 2024,” says the specialist.
The Mexican economy registered a better performance than its neighboring country to the north. The Gross Domestic Product (GDP) of the United States grew 2.9% at an annualized rate in 2022. The rise in interest rates in that country have slowed down some sectors (construction and home purchase), but have not caused by now the dreaded recession.
The economic growth of Mexico in 2022 even exceeded the forecasts of the World Bank. The international organization estimated the performance of the Mexican GDP at 2.6%. However, for this year the forecasts of the multilateral fall to a growth of barely 0.9% while in 2024 they will rise again to 2.3%
For this year, De la Torre warns of a possible risk of a future slowdown in the US economy, on which the performance of national exports largely depends. The other risk that the expert from the Espinosa Yglesias Study Center envisions is that inflation in Mexico has not yet been tamed, as well as the lack of legal certainty to attract more investment. “Investment is still relatively low, workers are arriving, but not to new plants, but to factories that were already installed,” he concludes. For now, the region’s second largest economy has shown a modest but favorable performance.