Analysts warn of recession in Mexico's economy by the end of 2023

Mexico City, January 30 (EFE).- An annual growth of 3.1% in gross domestic product (GDP) was reported this Tuesday, despite analysts warning of a slowdown in the Mexican economy at the end of 2023 and extending into 2024. .

Mexico's GDP grew by 0.1% in the last quarter of the year and by 2.4% year-on-year, according to timely estimates from the National Institute of Statistics and Geography (INEGI). said Gabriela Siller, director of economic analysis at Banco Base.

“This confirms a strong slowdown in economic activity in the last three months of 2023. This quarterly growth rate is the lowest since the third quarter of 2021,” the economist said in his report on the 'Economic Outlook of Mexico'.

A report by Citipanamex's Directorate of Economic Studies explained that the phenomenon occurred as growth in external demand was “weak” and internal demand was “significantly subdued”, resulting in stagnant industrial production and a slowdown in services.

The Citbanamex analysis also highlighted the impact of Hurricane Otis, which broke the intensity record by hitting the port of Acapulco in Mexico on October 25, causing the second highest impact with 1,940 million dollars in damages to insurers.

“We estimate GDP growth at 2.2% in 2024. We view the balance of risks to the downside given slower performance in late 2023; other relative downside risks are associated with a 'hard landing' of the US economy,” Citipanamex said. .

According to Inegi's updated figures, the 2023 increase comes after 3.9% growth in 2022, a 6.1% increase in 2021 and a historic contraction of 8.8% in 2020 due to the Covid-19 pandemic.

Mexico's increase was in line with 3.1% growth in GDP in the United States, the destination of more than 80% of Mexican exports.

The Consortium of Latin American Economic Advisers (Laeco) highlights the “somewhat pessimistic view” of a recent World Bank report, which forecasts growth of 2.6% for Mexico in 2024 and 2.1% in 2025, “reflecting a recorded downward trend. From 2022”.

“However, in our view, it is important to consider the realization of higher investment derived from the 'proximity' (the phenomenon of relocating candelas) and the continuation of remittance growth,” Lego clarified in a statement.

Intercam Bank argued that last quarter's growth “shows that the Mexican economy continues to expand at a good pace despite showing a slowdown compared to the previous quarter.”