Mexican economy faces “highly uncertain” outlook in 2023 due to possible recession in the U.S.

Mexico’s economy faces a “highly uncertain” outlook in 2023, with the risk of an eventual recession in its partner United States, the Mexican Institute of Finance Executives (IMEF) estimated Tuesday.

The president of the private institute, José Domingo Figueroa, explained that both the International Monetary Fund (IMF) and the World Bank anticipate a slowdown in the activity of advanced economies, which could even turn into a recession.

“For Mexico, 2023 looks difficult, with an expected Gross Domestic Product growth of 1.2 percent, which, although positive, is far below the 2 percent that could be considered the current growth potential and is subject to big downside risks,” said the expert at a press conference.

Among the main adverse factors, he mentioned the possibility of a recession in the United States, Mexico’s leading business partner, and the persistence of higher-than-expected inflation in that country and Mexico.

He added that Mexico could also face an “agitated” international economic environment due to geopolitical risks and budgetary problems in the United States.

Figueroa said there is the possibility of a better scenario for the Mexican economy if the opportunity represented by the so-called “nearshoring”, or relocation of supply chain links in North America, is taken advantage of.

“However, this scenario would require radical changes in some government policies, especially energy policy, which seems unlikely,” he said.

IMEF partners estimate Mexican GDP growth of 3.0 percent in 2022.

The Mexican economy, the second largest in Latin America after Brazil, grew by 4.7 percent in 2021, after the 8.2 percent collapse recorded the previous year due to the appearance of the new coronavirus.