The Bank of America and Monex estimate that the Mexican economy has had two consecutive quarters with falls in the Gross Domestic Product, which would place it in a recessive phase.
Mexico would be entering a technical recession according to the Bank of America (BofA) and the forecasts for the growth of the economy in 2022 were revised downwards by the specialists consulted by Citibanamex.
The financial institution Bank of America took into account the latest data from the Global Indicator of Economic Activity, provided by the National Institute of Statistics and Geography (Inegi), and interpreted that the Mexican economy would add two consecutive quarters of declines compared to its previous quarters. Which would mean that Mexico is entering a technical recession.
The Global Indicator of Economic Activity, which is released month by month, is an index that analysts use to estimate the growth and/or decrease in the Quarterly Gross Domestic Product, which is released on a quarterly basis.
With this measurement, the economy suffered a 5.2% drop in the third quarter of 2021 and the BofA estimates a 1.9% contraction for the last quarter of the year, taking into account the Timely Indicator of Economic Activity (IOAE) for December, with seasonally adjusted figures, released by Inegi this week.
“Disconcerting” data for the last quarter of the year
The IOAE for December estimated a 0.2% year-over-year decline in global activity during December 2021.
This data was considered “puzzling” by some experts, such as the deputy governor of the Bank of Mexico, Jonathan Heath, who stated: “If the IOAE estimates for the last two months of the year are correct and there are no revisions in the previous months, we can expect a drop of -0.5% in the fourth quarter compared to the previous one”
Jonathan Heath also points out that if this becomes a reality, “we can anticipate a 5.1% GDP growth rate for 2021”, a rate lower than that estimated in the latest Banxico survey, of 5.59%.
For its part, the Monex Financial Group indicated “given that the fourth quarter began with a fall, the stagnation of the last month of the year significantly increases the probability that the quarterly variation of GDP will be negative for the second consecutive period since in the 3Q- 21 the drop was 0.4%”. This would be evidence that the Mexican economy entered a recessive period.
Experts consulted by Citibanamex lower forecasts for 2022
For their part, analysts consulted by Citibanamex cut growth expectations for 2022 from 2.5% to 2.1%.
Optimistic, the Ministry of Finance and Public Credit (SHCP) anticipated that by 2022 the growth of the economy will be 4.1%; while the Bank of Mexico in its central scenario expects the economy to have an expansion of 3.2%.
The Bank of America (BofA) projected the largest cut, as it estimates that the Mexican economy will grow only 1.5% in 2022, from the previous 2.5%.