Fitch Solutions -a division of Fitch Group- raised its estimate of economic growth in Mexico from 1.1 to 1.8 percent in 2023 despite the fact that a significant slowdown is expected in Latin America, for which reason the country shows a better performance than expected in what what’s up this year
This is supported by three factors, including the fact that consumer spending in the US has rebounded at the beginning of the year, which boosts Mexican exports.
“In addition, the rigidity of the US labor market has also helped remittances to Mexico remain strong,” Conor Beakey, associate director at Fitch Solutions, said during a webinar.
The other factors are the inflow of foreign currency to the country due to nearshoring and the relaxation of fiscal policy in Mexico, which contrasts with the trend in other nations.
He described that this year’s budget deficit would rise from 3.4 percent of Gross Domestic Product (GDP) to 3.8 percent, as the government is looking to finish several large infrastructure projects before next year’s elections.
Regarding the use of nearshoring, he explained that Mexico has a long border with free energy access to the US, low wage costs, especially in relation to the exporting powers of East Asia.
In addition, he assured that energy policies and electoral reforms will not be a problem to transfer more chains to the country.
Regarding next year’s presidential elections, he mentioned that the two favorites to be candidates by Morena are Claudia Sheinbaum, head of the Government of Mexico City, and Marcelo Ebrard, Secretary of Foreign Relations.
“It seems likely that next year’s elections will pave the way for a modest improvement in the investment climate in Mexico,” Beakey said.
