In December, a measure of business confidence in Mexico dropped 2.99 points to 45.02, marking the second straight decline and the lowest level in the previous 22 months. From December 2021, business confidence dropped by 10.7 points, Mexico News Daily reported.

The Monthly Business Opinion Survey, conducted by the national statistics institute INEGI, is the basis for the Business Confidence Index (ICE). It takes into account the viewpoint of business managers in the manufacturing, construction, commercial, and non-financial services sectors to gauge their perception of the business climate in the nation.

Domestic concerns like high inflation and rising interest rates have a detrimental impact on business confidence. It is also due to global issues including the current conflict in Ukraine, the potential for a U.S. recession, and supply chain disruptions. Many respondents to the private sector poll may have reached the opinion that now is not the best time to invest as a result of this situation.

According to the financial services company Monex, the level of business confidence is the same as it was during the early months of the COVID-19 pandemic.

All questioned industries showed a loss of business confidence, although non-financial services saw the worst decline (by 2.3 points) from November to December. The sector saw a drop of 15 points from December 2021.

Manufacturing business optimism decreased by 0.2 points, commerce by 0.8 points, and construction by 0.5 points when compared to November. Manufacturing business confidence decreased by 3.3 points, commerce by 10.7 points, and construction by 5.6 points when compared to December 2021.

In general, the respondents believed that early in 2023, the service sector will continue to suffer the greatest adverse effects and that private consumption would most likely remain sluggish. Decreased confidence in the construction sector reflects a lack of public investment, in spite of the federal government's efforts to encourage investment in the southeast through significant infrastructure projects like the Dos Bocas refinery and the Maya Train.

Despite a minor drop in confidence in the manufacturing sector, Monex said there is cause for hope going forward because Mexico and the United States are planning to promote nearshoring.

The Mexican flag flies over the Mexico City Metropolitan Cathedral in Constitution Square. JOHN COLETTI

© 2024 Latin Times. All rights reserved. Do not reproduce without permission.