Mexico’s economic regions to pursue recovery amid U.S. uncertainties, says Central Bank

Mexico’s economic regions will persist in their recovery endeavors, albeit within a “complex and uncertain” milieu, primarily due to the U.S. economic outlook, as noted by the Bank of Mexico (Banxico).

The “Report on Regional Economies” presented by Banxico’s General Director of Economic Research, Alejandrina Salcedo, highlighted some of the principal risks faced by Mexico.

These include the potential decline in external demand, stemming from an anticipated slowdown in the U.S. economy.

“Such a downturn could adversely affect export-oriented entities in the northern and central regions or those that receive a significant flow of remittances or tourists from the U.S., such as some entities in the north-central and southern regions,” the report elaborated.

Additionally, a new supply shock, brought about by public security issues that could impede companies’ operations in crime-prone areas, poses another challenge.

Banxico stressed the necessity for Mexico to cultivate favorable investment conditions and bolster those factors influencing internal growth drivers.

“Specifically, the continual reinforcement of the rule of law, along with relentless efforts to combat insecurity and corruption, could stimulate the influx of investments not only from regions traditionally known for receiving a larger portion of these flows, but also from the south,” it suggested.

“To buttress this process, ongoing infrastructural development projects, especially those enhancing regional connectivity with other markets within and beyond Mexico, should be pursued,” it added.

As per revised official figures, Mexico’s economy, which ranks second in Latin America after Brazil, saw a 3.0% growth in 2022.

Private analysts surveyed by Banxico anticipate a 2.0% expansion in Mexico’s economy in 2023, attributed to a projected deceleration in the U.S.

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