The OECD improves its growth projections for Mexico to 2.6% in 2023

The Organization for Economic Co-operation and Development (OECD) improved its economic growth projection for Mexico this year and placed it at 2.6% from an estimate of 1.8 last March, a step forward that will be driven by “the solidity of this country’s public finances” and “the reality and promise of nearshoring”.

“The national economy that will remain strong in 2023 and 2024”

Alberto González Padiella, senior economist at the OECD, during a press conference, after the announcement of the organization’s economic outlook for 2023, revealed that the forecast for the economy has been raised “Because we have new data and the first quarter was much more positive than expected with 1%.” He added that “these very positive initial data have raised the growth forecast by 2.6% this year. Driven by the national economy which will continue to be strong in 2023 and 2024”.

González Padiella, acknowledged that This good performance is the result of prudent management of the economy “Public finances are its great strength. Mexico has exercised fiscal prudence over time and this is one of the pillars of the macroeconomic stability it enjoys today.” In addition, he said that Mexico could benefit from nearshoring “Because there is already evidence and indicators that show positive signs, especially due to investments that had been weakened, they have strengthened according to the latest data on investment in machinery and equipment, they are rebounding and these are the first signs that nearshoring is promising, but it is also a reality for Mexico”.

Beware if the United States enters an economic downturn

However, recognized that there are downside risks, especially if the United States enters an economic downturn, this would also affect Mexico. Although at any time I rule out a recession. Regarding the global outlook, the OECD expects the world to moderate its growth and settle at 2.7% for this year 2023, with a slight rebound in 2024 “being this lowest rate -excluding pandemic- since the financial crisis.

Result of complicated environment full of uncertainties due to high interest rates, central banks with restrictive economic policiesinflation that has been very difficult to reduce, insofar as underlying inflation remains high for a long time and geopolitical conflicts between Russia and Ukraine which will continue to put pressure on global economic stability. As for Latin America, in the region, the average growth will be 1.5%, affected by a drop in investment and inflation which, although it continues to be persistent.