Mexican fiscal deficit worries financial markets: Citigroup

Mexico City. The political noise in Mexico does not affect the financial markets as much, since they are more concerned about the country’s high fiscal deficit, close to 6 percent, and the US elections; The above, because the result of the elections will not change Mexican economic policy much, said Ernesto Revilla, chief economist for Latin America at Citigroup.

Within the framework of the 20th edition of the Latin American Conference on Treasury and Finance, the economist said that on June 2, Mexico will have a democratic election process, so any scenario will not give an important turn in the management of economic policy of the country and, even, with the possibility of the opposition winning the elections.

However, he warned, central banks will keep global interest rates, which determine the cost of credit at which companies and people are financed, high for a longer time, because it has been difficult to return to inflation targets.

Revilla maintained that in a context of high interest rates and volatility, such as that prevailing due to geopolitical shocks, this deficit is a factor of concern.

And Mexico will have to deal with one of the two most pronounced deficits in the Latin American region, just below Brazil, which this year will register a deficit of 6.9 percent, which the Rio country has been dragging since the covid pandemic. -19, due to the support that was given to the population for their confinement, explained the Citibanamex specialist.

No strategy

Ernesto Revilla asserted that the relocation of supply chains (nearshoring) is driving positive expectations for Latin America, mainly in Mexico.

However, the economist recognized that the Mexican government is not stimulating or making strategies to attract capital, much beyond entities that have an export vocation.

“The expectation is that the next administration develops strategies that capture investments and move production and demand of the nearshoringotherwise it will remain a wasted opportunity for the country,” predicts Ernesto Revilla.