1) Stagnation. According to recent reports from Inegi, the negative performance of industry and services could cause a significant contraction in the economy. In this same sense, the Global Indicator of Economic Activity published by the same organization, already confirmed a contraction of the Mexican economy of 0.2% in its monthly comparison.
The consulting firm Franklin Templeton recently published that, in the next 12 months, there is a 70% probability that there will be a mild recession in our country. Moody’s forecasts that the fall in the economy will have a much greater depth in the middle of the following year. The rating agency has warned that, in 2023, Mexico could face a “strong recession”, caused mainly by the economic slowdown in the United States, higher levels of inflation and interest rates.
two) Food inflation. A few days ago, the price increase reached its highest level since 1998, after exceeding 8.0% and standing at 8.16%. The subsidy implemented by the López Obrador government has guaranteed that fuel prices for the transport of goods and people remain unchanged. However, the use of fuel for agricultural and livestock production purposes (which do not receive any subsidy) has caused the impact of costs related to rural production to be transferred to increases in the prices paid by consumers.
In the first half of July, the increase in the cost of food, beverages and tobacco was 13.59% compared to the same period last year. This nearly doubles headline inflation. Worse yet, the Ministry of Economy, so far this six-year term, the price of tortillas has increased 44.74%, going from 14.33 pesos in December 2018 to 20.74 in June 2022. Another product that has suffered serious increases is the egg, which has increased its price by around 57.14%.
3) Drought. Finally, in the face of the water crisis that is currently being experienced in various entities of the Republic, Conagua revealed that 79.01% of the country was under some type of affectation that ranges from abnormally dry to exceptional drought. This same dependency declared that before the start of a new emergency due to lack of water in some northern states, it affects more than 90% of its territory, so private concessions can be used to redistribute them towards domestic supply.
