Mexico’s GDP grew 3.1% overall in 2022, driven by industrial activity

On February 24, the National Institute of Statistics and Geography (Inegi) raised the final annual growth of gross domestic product (GDP) in 2022 to 3.1%, after the preliminary estimate of 3% published in the January report.

These data result from annual increases of 3.3% in industry, 2.8% in the agricultural sector and also 2.8% in services, according to the first figures.

The rise in 2022 comes after growth of 4.8% in 2021 and the historic contraction of 8.2% in 2020 due to the Covid-19 pandemic.

After the sharp fall of 8.2% of the Mexican economy during the pandemic period, in two years the recovery was 7.9%.

Inegi reported quarterly GDP growth of 0.5% in the fourth quarter of 2022, after a previous estimate of 0.4%, according to seasonally adjusted figures, excluding seasonal factors.

He explained that this was due to quarterly increases in primary activities (2%), in the secondary sector (0.5%) and in the tertiary sector (0.1%).

In addition, Inegi raised fourth-quarter year-on-year GDP growth to 3.6%, compared to the same period in 2021, after a previous estimate of 3.5%, based on original figures.

This data is driven in particular by the year-on-year increase in the agricultural sector (+6.3%), accompanied by growth in services (+3.5%) and industry (+3.2%).

The GDP published on Friday is within the limit expected by the Ministry of Finance and Public Credit (SHCP), which had estimated growth of 3%.

In the private sector, there was also a consensus of 3%, according to the January “Citibanamex Survey of Expectations”, which is carried out among 33 analysis groups from different banks, brokerages and others.

While the Bank of Mexico (Banxico) had also forecast a 3% increase in its latest report last November.

For 2023, there is a lack of consensus on the projections, illustrated by a forecast of 1.7% from the International Monetary Fund (IMF), but an expected 0.9% from the World Bank.

Rogelio Ramirez de la Oowner of Ministry of Finance and Public Credit (SHCP)assured, in mid-February, that the relocation of supply chains to Mexico due to trade integration with North America is a unique opportunity to stimulate the country’s economic growth.

Ramírez de la O recalled that Mexico had a growth of 3% of its Gross domestic product (GDP) at the end of 2022 and expects the indicator figure to repeat itself in 2023.

For the federal official, only a global recession could affect the good performance of the Mexican economy, since he pointed out that there is an even more positive climate for Mexico compared to other latitudes such as Europe, the Japan or even its main trading partner, the United States. United States, which maintains expectations of a mild recession.

In this sense, he acknowledged that the North American country “is facing problems”, but assured that they are minor since it does not have high debt levels above 50% of the national GDP.

“We breathe an atmosphere of hope, of opportunity, and we want to take advantage of it,” said the head of the Treasury.

Ramírez de la O pointed out that the so-called “nearshoring” is not just a project, but is already underway, taking advantage of the commercial advantages of Free Trade Agreement between Mexico, the United States and Canada (T-MEC).

Moreover, this relocation of value chains represents an opportunity to stimulate exports, productive investment, job creation and improvement of the standard of living of the Mexican population.