Mexico’s economy faces dismal 2022 as growth separates from US

Chinese Technology Stocks bounce like cheap valuation bait for buyers

“Mexico is potentially in a low growth regime,” Capistran wrote. Weak activity data show “the rebound from the initial phase of the pandemic is over and that activity in Mexico is, if anything, moving down again.”

Mexico’s economy is presumably in for an unpleasant year in 2022, as the lift it gets from U.S. development is exceeded by blows from tight fiscal and monetary policies and vulnerability over the government’s agenda. Bank of America Corp. cut its development conjecture from 2.5% to 1.5%, analysts drove by boss Mexico and Canada financial expert Carlos Capistran wrote in a note Tuesday. Talking in a video conference subsequently, he said Mexico’s creation numbers currently reasonable won’t arrive at pre-pandemic levels until the following year.

Latin America’s second-biggest economy shrank in the third quarter of 2021, and a poor start to the October-December close to the year suggest the contraction wasn’t entirely due to one-time factors like the peak of Covid-19’s Delta variant, Capistran wrote. The bank also cut its growth estimate for 2021 from 5.8% to 5.2%.

The country has been propelled throughout the pandemic by hefty demand from the U.S., which helped businesses to quickly reopen and expand in the manufacturing heartland on the northern border.

However, Mexico now “seems to be decoupling from U.S. growth,” Capistran wrote. He argues the trend may be explained by the contrast between heavy spending and loose monetary policy in the U.S. versus President Andres Manuel Lopez Obrador’s austerity and the Bank of Mexico’s perennial hawkishness.

External funding has also been drying up, with investor appetite undercut by the president’s “state-centric agenda,” Olga Yangol of Credit Agricole CIB wrote in a note Tuesday. “Lopez Obrador has shown a tendency to centralize decision-making, which has led to institutional erosion and inefficient government functioning.”

He has further spooked investors with statist legislation like an electricity reform bill that seeks to boost the state utility’s market share. “The president is, as he has declared, doing Mexico’s 4th transformation, and all transformation processes imply change and hence uncertainty,” Capistran wrote. “High uncertainty has likely being one of the reasons why investment is very low.”

One of Mexico’s best opportunities for growth this year is “near-shoring” — a push to persuade companies that are moving away from China or want simpler supply chains to base facilities in Mexico, both analysts said. Neither was particularly bullish, however. Yangol noted “the government’s state-centric policy risks undermining the opportunity,” while Capistran wrote it’s unlikely to change this year’s growth “in a significant manner.”

The low growth and decoupling from the U.S. are likely to weigh on the peso, which could weaken from the current 20.4 to the dollar to 22 by the end of the year, Capistran said in the video conference.

Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
Standard Chartered hires Marisa Drew as Director of Sustainability
Standard Chartered hires Marisa Drew as Director of Sustainability
Drew will also join the CCIB Management Team. Emerging markets-focussed lender Standard Chartered said on Thursday it had selected supportability veteran ...
Vitamin D supplementation linked to reduced autoimmune disease – Consumer Health News
Vitamin D supplementation linked to reduced autoimmune disease – Consumer Health News
Abstract/Full Text “Autoimmune diseases are common in older adults and negatively affect health and life expectancy,” Hahn said in a statement. “Until now, ...
Hospitalizations for COVID-19 hit another high in Thursday’s DHHR report
Hospitalizations for COVID-19 hit another high in Thursday’s DHHR report
Thirty-nine of the state’s 55 counties are red on the COVID-19 county alert, meaning the highest transmission rate. That is down from 49 on Monday. “If you are ...
Sensata Technologies Reports First Quarter 2021 Financial Results
Automaker Stellantis signals better business performance in China
Our Standards: The Thomson Reuters Trust Principles. Register Register now for FREE unlimited access to Reuters.com Reporting by Sudip Kar-Gupta Editing by ...
Free at-home COVID tests are being made available in Montana
Free at-home COVID tests are being made available in Montana
Broadwater County Lewis and Clark County Testing ClinicLewis and Clark County Fairgrounds98 W Custer AveHelena, MT 59602Days / Hours of At-Home Rapid Test ...
SEBI Strengthens MF Norms;  Schemes can only be closed with the consent of the majority of unit holders
SEBI Strengthens MF Norms; Schemes can only be closed with the consent of the majority of unit holders
The trustees will have to obtain consent of unitholders by simple majority of the unitholders present and voting on the basis of one vote per unit held and ...
Sleepy Eye Elementary has 10 isolates for COVID |  News, Sports, Jobs
Whittier will reopen city facilities next week – Whittier Daily News
“My hope is we’re on the back side of the COVID surge,” Vinatieri said. “We want to be safe but want people to get out and make sure we’re back to business as ...
TVS Motor takes 75% in Swiss biggest e-bike player SEMG for $100 million
TVS Motor takes 75% in Swiss biggest e-bike player SEMG for $100 million
This will help us in expanding our e-mobility presence in remaining countries of Europe and in India, said Sudarshan Venu, Joint Managing Director, TVS Motor ...
Nervous markets fold as Powell signals they must go it alone
Powell says the US job market is consistent with maximum employment
“Most FOMC participants agree that labor market conditions are consistent with maximum employment in the sense of the highest level of employment that is ...
Kissht raises Rs 100 cr in funding led by Trifecta Capital, Northern Arc
Kissht raises Rs 100 cr in funding led by Trifecta Capital, Northern Arc
The company will utilise the funds to expand its scale of operations, enhance its product offerings including credit cards for small business/shops and ...
Show next
We will be happy to hear your thoughts

Leave a reply

Compsmag - Latest News In Tech and Business
Logo