Mexico is the second lagging country in terms of reactivation of private consumption among the largest economies in Latin America, only surpassing Argentina, a country that is going through a delicate macroeconomic situation, even before the Covid-19 pandemic.
During the first half of the year, the indicator had a 4% decrease in our country compared to the first half of 2019, the year before the health crisis.
This slippage is far from the 5.9% advance observed in Colombia or the 3.1% and 0.1% expansions registered in Chile and Peru, respectively, according to a review by El Economista of the original figures published on the internet portals of the central banks and statistical institutes of the countries indicated.
The Mexican dynamics is even lower than that observed in Brazil, a country that has not managed to return to its level of consumption prior to the pandemic, but is closer than Mexico, with a biannual fall of 2.6 percent.
Argentina, which has been going through a severe inflation and debt crisis for several years, shows a contraction of 7.5 percent.
With the exception of Mexico, all the aforementioned countries are distinguished by having channeled significant fiscal and monetary stimuli to cushion the drop in aggregate demand and supply and accelerate their reactivation, after last year’s mega-confinement to prevent the spread of Covid-19.
According to data from the International Monetary Fund and Moody’s, the cases of Brazil, Chile and Peru stand out, which applied measures with a cost of more than 10 percentage points of GDP.
Colombia and even Argentina –which has limited fiscal space amid the renegotiation of a large debt with the IMF–, applied packages whose cost was equivalent to just over five percentage points of the product, while in Mexico the fiscal support represented less 1% of GDP.
The drop in Mexican household consumption during the second quarter of 2020 was 21% year-on-year, the third most pronounced among the economies analyzed, only surpassed by Peru (-22.1%) and Argentina (-23.8 percent).
In the process of economic recovery, the Mexican government has relied on the positive effects of the neighborhood with the United States, a country whose ambitious stimulus programs to reactivate the economy have generated economic spillovers in Mexico.
An example of this are the remittances sent by Mexican nationals in the United States, which in 2020 broke a record by growing 11.4% to 40,607 million dollars and in 2021 they are shaping up to beat the mark.
Between January and August 2021, this flow of resources has increased 24.8% to 32,931 million dollars.
Another pillar of the Mexican reactivation that also depends on its northern neighbor are exports, which, between January and August of this year, have grown 3.5% compared to the same period of 2019 and since November 2020 had exceeded their pre-pandemic levels.
These carry-over effects will not be enough, however, for the Mexican economy to return this year to its 2019 level, which would happen in the cases of Colombia, Chile and Brazil, according to the forecasts of the Economic Commission for America Latina, which expects growth in these economies of 9.2%, 7.5% and 5.2%, respectively.
