This 2024 looks good in economic matters for Mexico, despite the fact that growth could be lower than at the end of 2023 and will range between 2 and 3 percent, said Dr. Igor Rivera González, director of the TEC de Monterrey Business School. CDMX Campus.
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The specialist asserted that the internal engine will continue to be stabilized. The lack of internal consumption will be compensated by the investments that arrive around nearshoring, and this will have two effects. Due to the electoral expectations in Mexico, the United States and other countries, risk will increase and the flow of investment will probably be slowed down this year.
For Dr. Rivera González, in the case of inflation, energy prices are the variable to observe. Due to the winter, they could become more expensive at the beginning of the year, but in the long term a downward trend is seen, and this, being now the main driving force, has a direct effect on monetary policy decisions.
The Bank of Mexico (Banxico), which has the constitutional mandate to control inflation, in the second half of the year, also perceiving less pressure on the Price Index, is likely to begin to lower the inflation rate in a very short period of time. interest.
In an interview with El Sol de México, Dr. Rivera said: “I would start by talking a little about what is observed in terms of economic growth, inflation. All macro variables are closely linked, because they have an impact on other variables. We will talk about economic growth, inflation, interest rates and exchange rates, which are the 4 key aspects to discuss.”
In terms of what economic growth is, there are two components in the country, which are the internal engine and the external engine, he explained.
The expectation regarding the internal engine will continue to stabilize. The lack of internal consumption will be compensated by the investments that continue to arrive around nearshoring.
The specialist explained that this will have two effects: Due to all the electoral expectations that exist in the world in Mexico, the US and other countries, the risk area and the flow of investment will increase. Nearshoring will most likely slow down this year.
And therefore, the growth we expect in Mexico will be a little less than what was observed at the end of 2023. It will range between 2 and 3 percent. 2.5% would be a reasonable projection.
Regarding inflation in general, we see that certain industrial and food inputs are more or less contained at this time in prices or at least all the negative effects that we had with 2022 and 2023 have already been discounted.
Energy, the variable to observe
So, due to inflation, energy prices could be the variable to observe. The price will not be sustained throughout the year, only in the first months.
And this has to do with winter in many of the very large economies that suffer from it. And fuels are now a very precious commodity for everything that could be heating and could become more expensive at the beginning of the year.
But in the long term there is a rather downward trend. And this, being now the main engine of inflation, has a direct effect on monetary policy decisions, particularly of a Central Bank, such as the Bank of Mexico.
He stated: “In the second half of the year, upon perceiving less pressure in the price index, it is feasible that in a very short period, the interest rate will begin to drop.”
Dr. Rivera González also commented that the Bank of Mexico has to be very careful in the times in which it takes certain measures, “because at the end of the day the interest rate is a factor that international investors use to compare interest rates. a country like the United States.”
He warned that “if Mexico were to lower its interest rates rapidly, very early versus what the FED does in the US, the interest or tranquility that may be had in the rates of the United States will be lost a little.”
Should there be a certain harmony?
It is not an obligation; but it must be taken care of for competitiveness between different markets.
Right now, what can be expressed is that the FED in a very short time, perhaps at the end of the first quarter of 2024, would begin to lower the interest rate and that will also give respite to the Central Bank.
If inflation does not exert so much pressure at this time and, comparatively, other markets such as the US, where we frequently compare ourselves, does not accelerate this pressure as much, then we expect the Central Bank to begin lowering the interest rate very soon.
And the other variable, in conjunction, also has to do with the exchange rate. If we see that the inflow of capital continues, even less, with nearshoring, the interest rate has to be globally competitive. In general, we could find some stability regarding the exchange rate.
Regarding the exchange rate, the director of the TEC de Monterrey Business School said:
“It has always been below 17 pesos, due to temporary situations that arise, but it always returns in the long term and perhaps it may not permanently exceed 18 pesos per dollar throughout the year.”
In summary, we see that the relocation of companies from the United States, returning them to the American continent, in their own territory or in Mexico, the trend that we understand as nearshoring, is derived from the long-standing tension between the economies of the United States and China.
Does salary recovery help contain the fall in domestic consumption?
This partial recovery of the middle class to contain this drop in consumption at the local level is a helping factor. I also think that the macroeconomic management of debt has helped.
And regarding Pemex’s debt?
Although last year there was a significant decrease in Pemex’s debt, as long as a more or less stable proportion to GDP is maintained that does not greatly exceed 50 percent, that will be a very good sign of macroeconomic management.
We must also consider that the dollar is strengthening globally. We are not going to see this 16.77 peso dollar at its best for a long time, but by compensating or leveling these effects of the strength of the Mexican peso and with the strengthening of the dollar, it can bring the exchange rate to 18 pesos per dollar at throughout 2024.
Did the strengthening of the peso hurt corn and wheat producers last year?
Yes, product exporters can be harmed by the lower exchange rate and in general, lose competitiveness abroad.
It is a variable that can have, in some way, a side effect, but well, in this case the fact that it remains more or less within these bands helps very well the entire planning of importers and exporters.
In your opinion, are the prospects good?
Yes, I think it is a year that looks good for Mexico, even though growth could be a little lower than in 2023. It is an inertial situation. Growth even at a global level could be lower, since a spectacular result would not be expected from the Mexican economy, but it is perceived that these variables will remain stable.
Even the improvement in interest rates will greatly benefit companies, all those seeking to finance debt.
There are even other factors that can have a very positive effect on the local economy, he noted.
Dr. Igor Rivera recalled that “towards the end of 2023, the new Securities Market Law was approved in the Congress of the Union, which will allow financing through the Mexican Stock Exchange (BMV) other companies of the that were traditionally financed through the Stock Market.
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This will give a lot of dynamism to the economy if all these facilities are taken advantage of, if they occur at the right times. This new Securities Market Law has already passed through the chambers.
But it needs secondary regulation that the National Banking Securities Commission (CNBV) will have to issue, argued the financial specialist.
2024-01-07 22:29:27
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