Bank of Mexico deputy governor sees weak FDI flows hitting pandemic recovery

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MEXICO CITY, Oct 13 (Businesshala) – Central Bank deputy governor Jonathan Heath expects Mexico’s economy to begin recovering from the damage from the pandemic in 2023, but due to weak foreign investment flows, according to remarks released on Wednesday. Expansion will be “relatively slow”. .

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Mexico’s economy fell 8.5% in 2020 due to the COVID-19 pandemic and the central bank, known as Banxico, forecasts that Latin America’s second-largest economy will grow by 6.2% this year and 3% in 2022.

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Heath forecasts that local economic activity will peak in 2018 by the end of next year.

“Starting in 2023, we are expecting an expansion, but a relatively slow expansion, where the most absent factor is private investment and that’s going to be really, I think, the real challenge from 2023,” he added. Said in a podcast released by Banorte Financial Group.

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Despite his conservative forecast, Heath rejected suggestions that countries may be stuck in inflation, a term used to describe an economy with a significant increase in inflation and a high unemployment rate. Is.

Inflation in Mexico was 6% in September.

“We are in the process of recovery, we are growing, including the expansion above the 6% projected this year, so as not to undermine its valuation,” he said.

“Maybe it’s not enough to end the recovery phase and move on to a new expansion phase, we still have some way to go.”

Heath calculated that the output gap is closing and is currently close to zero, while in some areas it is positive.

“That is why we are easily seeing a hike in prices. (Reporting by Shari Angullo; Writing by Drazeen Georgic; Editing by Aurora Ellis)

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