The first has to do with the big surprise of 2022, inflation. I think we are going to see a general decline in the world, although at different rates in each region. In the United States it has already started to drop, although the core is still at levels not seen since 1991. This coincides with a labor market that remains strong and this leads one to assume that a great sacrifice will have to be made in terms of employment to control inflation .
It seems to me that there is a risk of diagnosis. This Phillips curve-type interpretation assumes a “normal” cycle, not the sequence of extraordinary shocks that we have experienced in the last three years and that have meant that employment does not lag behind the progress of the economy. That could imply a Fed that squeezes too much, financial stability risks, low inflation and growth in our neighbor to the north: less than 2% and 1% respectively for the last two variables.
In Mexico, the decline in inflation will be more gradual – and hardly linear – because the energy price policy cushions its effects, both upward and downward. It also counts that the weight of food –whose decrease in prices is less clear– on the Mexican basket is greater. The latest survey among Citibanamex specialists sees inflation in our country closing 2023 at 5.1%. I think we could be below 5%, but with a large dispersion in relative prices.
On the growth front, 2022 surprised to the upside in Mexico with an increase in GDP close to 3%. It will be the first time in eight years that we have grown more than the United States. However, assuming that we decouple and will not be affected by the slightest activity in the United States would be a serious mistake. If our neighbor grows less than 1% in 2023, it is difficult to think that Mexico can advance much more.
A recurring argument is that the nearshoring can help us. Maybe, but I don’t think it implies a structural change of such a magnitude that it could change the trend (in fact, at a structural level the nearshoring implies trade diversion and as such, efficiency losses). A growth of only 1% in 2023 – quite probable – would require that the GDP advance at least 2% in 2024 so that AMLO’s term would not be the six-year term with the lowest economic growth in recent history. The economy therefore will not help to relax an increasingly rarefied political environment, on the contrary.
But it is on the foreign trade front that I focus my concerns. I think our government conceptualizes disputes on this front with our partners as issues politicians, not technical or commercial policy. Eventual rulings against us in panels such as the one associated with energy policy involve substantial risks for different sectors. Agri-food exports, for example, accumulate 37.8 billion dollars (billion dollars) in January-September this year, more than the oil companies (30.1 billion dollars) and unlike the latter, the balance of the former reports a surplus for eight years.