Banxico deputy governor: Mexico will feel the impact of the U.S. economic slowdown

The deputy governor of Mexico’s central bank (Banxico), Gerardo Esquivel, said Wednesday that the decisions of the U.S. Federal Reserve (Fed) will have an impact on economic activity as it needs to “cool down.”

In his participation in the podcast Norte Económico of Grupo Financiero Banorte, Esquivel stressed that the Fed had adjusted its interest rates significantly in a short period to contain inflation, which will have an impact with some delay.

“The impact will be felt only after a certain time, possibly in three or four quarters, so there will be some delay,” the deputy governor said.

“And then we will see the impact of these measures, which I stress are of significant magnitude,” he added.

Esquivel said industrial activity in the United States is most closely linked to Mexico’s partner and is, therefore, the leading indicator of export performance.

The deputy governor explained that the U.S. economy has a differentiated behavior, so the impact on Mexico could be the same.

“At the moment, the outlook is still for low but positive growth, and that also reinforces the assessment that growth in Mexico will continue to be positive next year,” he explained.

In late August, Banxico lowered its forecast for Mexican economic growth in 2023 to 1.6 percent from 2.4 percent, citing a deterioration in the global economy, particularly in the United States.

Mexico’s gross domestic product (GDP) grew 4.8 percent in 2021 after slumping 8.2 percent in 2020, the worst performance since the 1930s due to the new coronavirus disease (COVID-19).

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