Treasury improves its projection for Mexico’s GDP in 2021 to 5.3%

RIO DE JANEIRO, BRAZIL – The Ministry of Finance and Public Credit (SHCP) on Wednesday improved its growth outlook for Mexico’s economy this year, given the vaccination campaign’s progress against Covid-19.

According to the General Economic Policy Pre-criteria 2022, which were delivered this morning to Congress, the Gross Domestic Product (GDP) is expected to grow at a rate of 5.3 percent. The previous outlook for this year was 4.6 percent.

“Derived from the strengthening of the domestic market, which has benefited from the progress of the vaccination campaign against Covid-19, as well as greater dynamism in the world economy, including the recovery of global oil prices, the SHCP updates to 5.3% the economic growth figure for public finance estimates in 2021,” the agency specified.

In addition to the vaccination campaign, the Treasury highlighted economic activity recovery in the United States, Mexico’s main trading partner. For this year, the government expects the neighboring country to grow at a rate of 5.8%, supported by its foreign trade. The above, he added, would be catalyzed by the entry into force last year of the T-MEC.

“It is estimated that these new elements will offset the effect of the partial suspension of activities implemented at the beginning of the year to contain the spread of Covid-19, which had a more limited, temporary, sectoral and regional scope than that of April-May 2020, and the shortage of natural gas experienced during some days in the second half of February,” he added.

In the case of next year, the agency headed by Arturo Herrera estimated a 3.6% growth.

In recent days, Herrera said that the Treasury’s expectation would be modified, which would be in line with the modifications made by organizations and institutions regarding the Mexican economy’s growth.

“It seemed paradoxical to me that when we proposed the highest fall (of the economy) since 1932, people told us to be optimistic, but even so, what happened was that, as time went by, the forecasts of analysts, rating agencies, organizations, began to converge with the Treasury’s forecast for 2020 and 2021,” he said at the time.

The Bank of Mexico, for example, expects 4.8% growth for the Mexican economy this year, while the International Monetary Fund (IMF) expects 4.3%, and the Organization for Economic Cooperation and Development (OECD) expects 4.5%.

In addition to the GDP revision, the Treasury increased its year-end inflation estimate from 3.0% to 3.8%, while the price of oil per barrel increased from US$42.1 to US$55.0, in contrast to the production platform, which decreased from 1,857 to 1794 million barrels per day.

Source: El Economista