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

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

“The recovery of the Mexican economy has been delayed in the region and other rating countries in the wake of the deep economic downturn caused by the 2020 pandemic,” Carlos Morales, sovereign director at Fitch Ratings, said in an emailed comment to Reuters.

Mexico’s fiscally conservative President Andres Manuel Lopez Obrador has resisted pressure to borrow to support the economy and drastically cut budget spending to cushion the economic impact of the pandemic compared to his regional peers.

At the same time, Lopez Obrador has been arguing with some companies, especially in the main energy sector, which has unnerved investors.

“Real (projected) GDP will not reach pre-pandemic levels until 2023, that is, average cumulative growth for Mexico is close to zero between 2020 and 2023, according to forecasts by Fitch Ratings,” Morales said.

The latest gross domestic product (GDP) data showed that the Mexican economy grew 0.9% in the second quarter of the previous three-month period, slightly less than the initial data, but enough to support the country. Row. The growth was 2.0% compared to the previous year.

Analysts warned that a recession in the United States, Mexico’s main trading partner, could also hurt Mexico’s still-fragile economic recovery.

“Our baseline forecasts do not expect a recession in Mexico or the United States. But in a scenario where the US economy is in a more severe recession than we expect, Mexico will not come out unscathed,” Joan Domin of Oxford Economics said in a research paper. Last month.