Bloomberg — An almost certain recession in the United States in 2023 could shrink the economy of Mexico, its trading partner, according to models from Bloomberg Economics.
Forms Giving a 100% probability that the US will fall into a recession in the next 12 months, US economists Elisa Winger and Anna Wong wrote on Monday that it is “difficult to imagine” that the Federal Reserve could rein in high inflation without causing an economic downturn.
Last week, Philip Hernandez, Bloomberg’s Latin America economist, wrote that under these circumstances, the Mexican economy should steadily lose momentum before declining in the second half of 2023.
For Mexico, Hernandez wrote that “after a short and shallow recession, growth will pick up rapidly in 2024.”. US models do not take into account the magnitude of the slowdown, but US President Joe Biden’s predictions that “any recession that will be ‘very slight’ may end up correcting”, Think analysts Winger and Wong. The three economists note that there is no guarantee that the models are correct.
Mexico has become more dependent on the United States during the Covid-19 pandemic, as President Andres Manuel Lopez Obrador has refused to increase spending to prop up the economy. as such, Its recovery has largely depended on demand from American consumers and foreign companies investing in Mexico with the goal of serving the United States. Both factors would be hampered by the downturn in the US economy, Hernandez wrote, as well as the remittances sent home by Mexicans living in the US that helped keep the country afloat.
“A recession in the US would be a big blow. Hernandez wrote that the US recovery from the pandemic has been one of Mexico’s few growth drivers since the outbreak.
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