Although the Mexican economy is expected to grow by 5% in 2021, the perspectives towards 2022 and 2023 are less optimistic, warns the economist Everardo Elizondo.

By INSTITUTIONAL COMMUNICATION | EGADE BUSINESS SCHOOL

Even though the negative effect of the COVID-19 pandemic has diminished, the end of its impact is not imminent, warned Everardo Elizondo, EGADE Business School professor.

“During 2020, unprecedented ‘protection’ and ‘support’ actions were implemented by governments, the effects of which can still be felt to this day,” said the former Deputy Governor of Banco de México.

The consequences for Mexico’s economy have been huge, even greater than those observed in the United States; however, the "neighborhood effect" has played an important and positive role recently, and will continue to do so, Elizondo affirmed.

The economist participated in the EGADE Future Forum series, in the webinar “Mexico’s economic perspectives, 2021-2022”, moderated by Raúl Montalvo, Director of EGADE Business School, Guadalajara.

“It is important to be aware of the relationship between investment and growth; it is a structural aspect of Mexico’s economy, and is the secular weakness of investment, which has been decreasing,” Elizondo explained.

Without robust investment, he said, there will be no capital accumulation per worker and, consequently, no sustained productivity growth, without which the population’s wellbeing cannot grow.

“Mexico’s economic policy has discouraged private investment,” he declared.

Despite regarding inflation as transitory, Elizondo recalled, Banxico considered its upsurge as risky, deciding on June 24 to increase the target rate by 25 percentage points.

“Mexico has maintained a ‘conservative’ stance in terms of tax incentives,” he said.

Regarding the economic growth forecast, he mentioned that the perspective of analysts is that, in 2023, it will go back to the 2 percent that has been characteristic of the Mexican economy for over a generation.

“We are going to be a long way from returning to pre-pandemic levels (5 percent in 2021, and 3 percent in 2022),” Elizondo said.

Watch the complete webinar here.

With information from Valentina Flores Cáceres.