Mexico’s economy to reach pre-pandemic levels in 2023, but lag behind peers – Fitch

In 2020, the Mexican economy, the second-largest in Latin America, experienced its biggest annual contraction since the Great Depression of the 1930s, but recovery since then has been sporadic.

“Mexico’s economic recovery has lagged the region and its rating peers following a deep economic contraction caused by the 2020 pandemic,” Fitch Ratings’ sovereign director Carlos Morales said in an emailed opinion to Reuters.

Fiscally conservative Mexican President Andres Manuel Lopez Obrador has resisted pressure to borrow to support the economy and has cut budget spending significantly more than regional peers to reduce the economic impact of the pandemic.

At the same time, Lopez Obrador’s relationship with some companies, particularly in the key energy sector, has worried investors.

“Real GDP will not (expectedly) reach pre-pandemic levels until 2023, meaning Mexico will have average cumulative growth close to zero between 2020 and 2023, according to Fitch estimates,” Morales said.

The latest gross domestic product (GDP) data showed the Mexican economy grew 0.9% in the second quarter from the previous three-month quarter, slightly lower than initial data but enough to give the country its second positive quarter in a row. . The growth was 2.0% compared to the previous year.

Analysts have warned that a slowdown in Mexico’s main trading partner, the United States, could also hurt Mexico’s still shaky economic recovery.

“Our baseline forecast does not expect a recession in Mexico or the U.S. But in a scenario where the U.S. economy is in a steeper downturn than we expect, Mexico will not emerge unscathed,” John Tomen of Oxford Economics said in a research note. Last month.