MEXICO CITY — Several financial organizations, including the International Monetary Fund, have been lowering ratings and forecasts on Mexico’s economy. The Mexican president said he mistrusts these organizations. But what does the downgrading of Mexico’s economy mean?
The IMF expects a growth of 0.9% of the Mexican economy this year, 7 points less than its previous forecast during the first quarter of the year.
Juan Carlos Orozco is head financial analyst with Grupo Reforma, a major Mexico newspaper. He explained big economies tend to have a small growth, but those emerging should have a high number. China, for instance, reached a 10% growth forecast at some point.
According to Orozco, a strong, emerging economy like Mexico’s should be at least on a 3.5 expectation growth, which should translate into more employment and wealth.
The expert explains investors and qualifiers are uncertain with Mexico’s current policies, as the government bets on distributing the wealth instead of generating enterprise growth.
Bank of America has warned of an eventual recession in Mexico. But Orozco said the economy will keep stable if there’s growth, even as it shrinks. A real recession needs to have a significant contraction in employment, consumption and investment.
