Mexico’s economy will grow 3.7% in 2021, estimates the World Bank

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MEXICO –  Mexico's economy will recover from the expected 9% decline in 2020, with growth in 2021 of 3.7%, the World Bank estimated.

This due to an improvement in Mexican exports to the United States and less uncertainty about the application of the renewed USMCA. However, by 2022 its rate of expansion slows to 2.6%, the agency predicts.

“The percentage growth in 2021 is insufficient to reverse last year's production losses and is being held back by factors including long-standing planned fiscal consolidation and weak investment. Growth is projected to slow to 2.6% in 2022 as external demand growth weakens and the momentum to economic activity from labor market improvements begins to fade,” warns the report released by the organism in Washington, United States.

The growth forecast for 2020 improves from a 10 drop anticipated last October by the World Bank Vice President for Latin America, remains the same for 2021 and, for 2022, adjusts slightly down from 2.8%. predicted three months ago.

Compared to the June World Bank Group Global Economic Outlook report, Mexico's expectations improved 1.5 points for 2020 and 0.7 points for 2021.

The performance of the Mexican economy is aligned with the growth projections for the Latin American region, of a rebound of 3.7% in 2021 and 2.8% in 2022, after estimating a contraction of the region's GDP of 6.9%.

The outlook is that COVID-19 vaccination will accelerate during the second half of this year and that oil and metal prices will be higher than expected in June, averaging US$44.00 per barrel in 2021 and US$50.00 in 2022.

The rebound of the regional economy will depend on the relaxation of initiatives to mitigate the pandemic, the distribution of vaccines, stabilization of the prices of the main basic products and improvement of external conditions. “However, the rebound will be very weak and will come after a decade of slow growth. In a negative scenario, in which the distribution of vaccines is delayed, with secondary economic effects, growth could be even lower, 1.9% in 2021 and 2.3% in 2022, "the Bank says in its report.

Source: El Economista