AMLO pauses economic curse of ‘flu’ in US and ‘pneumonia’ in Mexico

AMLO pauses economic curse of 'flu' in US and 'pneumonia' in Mexico

While the United States reported a drop in gross domestic product (GDP) of 0.9% for the second quarter of the year, the Mexican economy grew by 1% during the same period, breaking the “ curse” which said that if the northern neighbor fared badly, Mexico fared worse.

The tendency, according to different experts, was that if the United States caught a “cold” or a “flu”, gave Mexico “pneumonia”this in reference to the fact that if the country governed by Biden was going through a bad period in its economy, in Mexico the problems were greater.

This Friday, President Andrés Manuel López Obrador celebrated that Mexico experienced economic growth for two consecutive quarterswhile the economy of other countries (such as the United States) has contracted in the same period, to the point that some specialists already consider the situation as a technical recession.

As if that were not enough, the inflation rate in Mexico is lower than that of the United States, although both are high, which is why some specialists consider that the López Obrador administration end the curse of the Mexican economy compared to the American.

Fear of a recession in the Mexican economy persists

Other less optimistic specialists point out that the possibility of a recession of the Mexican economy is still possiblealthough not immediately.

Moody’s Analytics recently reported that the scenario for the Mexican economy does not look good for the second half of 2023, as the country will face different issues that could lead to a recession. at the end of this year.

The analyst firm has drawn up a scenario in which it indicated that Mexico will face “the persistence of supply shocks in the global economy, high commodity pricesand weakening domestic demand due to the need for greater monetary restraint to bring down high inflation”.

With the above, it is estimated that Mexico’s economy shrinks 3.4% between the second and fourth quarters of 2023, a drop that would be “pneumonia” compared to the possible 2.1% drop for the United States predicted over the same period.

How has the Mexican economy been supported if its main trading partner is the United States?

According to Enrique Quintana, general editorial director of The financierMexico”It is subject to what happens in the United States”.

In his column published in The financier On July 18, Enrique Quintana stressed that it is very important for Mexico that the population of the United States has not (yet) reduced its consumption significantly.

The U.S. retail sales figure shows 1% growth for the month of June, which is a good indicator for the Mexican economy, because while the downturn in the U.S. economy is short Mexico’s exports and economic activity will not be affected.

“If you combine a slight drag on exports with persistent momentum in consumption, then you have a scenario in which a recession is not looming, but rather a slowdown in economic activity,” said Enrique Quintana.

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