Economy has maintained solid performance, despite global risks: SHCP

Mexico City. Although geopolitical tensions have intensified and put new pressures on global trade, the Mexican economy has maintained a solid performance reflected in the results in the labor market and in the consolidation of the country as one of the most important destinations for investment. direct foreign investment worldwide, said Rogelio Ramírez de la O.

The Secretary of Finance and Public Credit (SHCP) highlighted that in an environment of global risks, such as geopolitical tensions in the Middle East or attacks by belligerent groups in the Red Sea, which have caused disruptions in the transit of goods through of the Suez Canal, have put new pressures on trade and the global economy.

However, he highlighted, “Mexico’s economic growth during 2023 exceeded the historical average for the third consecutive year, and we hope that this dynamic will continue this year.”

Within the framework of the inauguration of the 33rd Insurers’ Convention, the person in charge of the country’s public finances maintained that growth is reflected in good results in the labor market.

Ramírez de la O highlighted that the first figures of the year show that the strength of the labor market has extended to 2024.

Thus, during the month of February, the unemployment rate remained at low levels of 2.5 percent. At the same time, there have been increasing levels of labor participation, and a good pace of job creation.

“The increase in labor participation has been a great positive surprise. At the same time, inflation has continued to decline and is closer to the Bank of Mexico’s target range (3.0 percent +/- one percentage point), when in September 2022 it reached its maximum point of 8.7 percent, in “The first half of March was 4.5 percent.” In the morning, Inegi revealed that annual general inflation stood at 4.42 percent in March.

High rates benefit the weight

“The external sector, for its part, remains in balance with moderate current account deficits and international reserves at historic highs ($217,298 million); The exchange rate has been appreciating in recent years, I must add that from our point of view, that is, due to the high interest rate.”

From the end of 2021 to date, the peso appreciated more than 20 percent and is at levels similar to those it had in 2015 (16.33 per dollar).

The Secretary of the Treasury asserted that some of the transformations in the world are also opportunities for the development of the country, I am referring to the reconfigurations in global value chains that imply, among others, the relocation of companies to Mexico.

In 2023, “Mexico consolidated itself as one of the most important destinations for foreign direct investment worldwide, reaching a historic amount of 36 billion dollars. Preliminary data on investment announcements indicates that this figure could be exceeded this year and the next”.

These new investments will eventually lead to the consolidation and emergence of new industries in the country, said Ramírez de la O.

Likewise, he assured that we are witnessing the increase in Mexico’s participation in US imports, thus becoming its main trading partner.

Dynamic sector

Rogelio Ramírez de la O, Secretary of the Treasury, stated that the insurance sector is one of the most dynamic and strategic in the economy, and that is why he is interested in this opportunity.

And from the covid-19 pandemic to the recent escalations in geopolitical conflicts and climatological phenomena, the world economy faces events that, to a large extent, are unpredictable, whose effects have permeated homes, companies and governments.

Premium issuance reached its pre-pandemic level in 2023, making it a full recovery after the sharp drop recorded in 2020.

As in other areas of the financial system, the size of the insurance sector is still low compared to its international comparisons, while in the Organization for Economic Cooperation and Development (OECD) the sector represents 9.0 percent of the gross domestic product. (GDP), in the country it is 2.4 percent.

On the other hand, according to the National Financial Inclusion Survey, only 21 percent of the adult population had some type of insurance in 2021, access is even lower for women with only 16 percent of adult women having any type for sure.

31 percent of the population does not take out insurance for economic reasons; 26 percent consider that they do not need them and 16 percent believe that they are very expensive.

“To overcome these barriers, we must focus on strategies that promote financial education, innovation in insurance products adapted to the needs of different social groups, and the development of technological platforms that facilitate access to and management of insurance,” recommended the secretary of Treasury in its last intervention at an Insurance Companies Convention.