Mexican Economy Attains 3% Growth For 2022, Reports National Statistics Agency

After the COVID-19 outbreak and related restrictions caused its GDP to decline significantly in 2020, the Mexican economy rose for a second year in a row in 2022, Mexico News Daily reported.

Seasonally adjusted GDP growth was recorded last year at 3% annually, barely shy of the IMF's prediction of 3.1% growth, according to data released by the national statistics office INEGI on Tuesday.

The estimate is based on preliminary growth data for the fourth quarter of 2022, so it could be revised when final numbers are released on Feb. 24.

The economic expansion in 2022 followed a 5% growth in 2021 as GDP rebounded from an 8.5% contraction in 2020.

The 3% growth seen last year, according to Gabriela Siller, director of economic analysis at Banco Base, indicates that the economy has largely recovered from the COVID-induced economic catastrophe.

The economy's 3% growth occurred against a backdrop of consistently high inflation and historically high-interest rates as the Bank of México tightened monetary policy in an effort to bring down skyrocketing prices.

Although nearshoring, or the movement of businesses to Mexico so they may be near the US market, helped the economy in 2022, Siller claims that growth could have been much higher had the phenomenon been utilized more effectively.

The economy has recently benefited from private investment and consumption, according to deputy finance minister Gabriel Yorio.

INEGI’s preliminary data for the fourth quarter of 2022 showed that GDP expanded 0.4% compared to Q3 and 3.6% compared to the final three-month period of 2021. The former figure indicates a slowdown, as quarter-over-quarter growth was 0.9% in Q3.

However, the GDP has now grown for five straight quarters.

The likelihood that the economy could experience stagflation—high inflation, slow growth, and high unemployment—has been "practically eliminated" in light of the most recent data, according to Janneth Quiroz, deputy director of economic analysis at the Monex banking company.

A slowdown is predicted in 2023 amid challenging global economic conditions, but Mexico is not expected to go into recession.

On Monday, Jan. 30, the International Monetary Fund lifted its forecast for 2023 GDP growth in Mexico from 1.2% to 1.7%, while the World Bank currently projects a 0.9% expansion “as restrictive monetary conditions, stubbornly high inflation, and softer exports curtail activity.”

The federal government projects a 3% growth in 2023, which is a more optimistic forecast.