Cesáreo Gámez: Counting the damage

The Mexican economy registered a modest recovery in 2021, after a brutal fall in 2020, mainly due to the effects of the COVID pandemic and a lack of adequate response from our authorities.

Starting with GDP, after a brutal 8.3 per cent decline experienced in 2020, it showed a recovery of 19.6 per cent in the second quarter of this year, primarily driven by the 18.7-point decline experienced in the same quarter last year. Explained. ,

In the third quarter, the recovery moderated, with a growth of 4.5 per cent, with the overall 2021 forecast at a little over 5 per cent, much lower than the decline recorded last year.

One of the most affected sectors was gross capital formation. The indicator, which showed negative double-digit rates between April 2020 and January 2021, showed a recovery trend in the central months of last year that eased towards the third quarter. However, productive investment is well below pre-pandemic levels.

In particular, investment in the national machinery and equipment is still lower than in September of last year 2020.

Productive investment is a key element for the sustainable development of an economy and its contraction has a significant impact on productivity, job creation, wage levels and the well-being of the population.

A similar situation can be observed in private consumption of goods and services. This variable also experienced negative double-digit rates in the intervening months of 2020 to regain growth through 2021, but its levels remain below the pre-Covid-19 pandemic levels.

Similar trends can be seen in industrial production, commercial sales, construction and services.

One aspect was the retail sales of automobiles particularly during 2021. After the fall recorded in 2020, it started a correction in the intervening months of last year, but returned to negative rates in the final months.

As of September, it began to show negative rates, reaching a decrease of 7.8 percentage points in December 2021 with respect to the same month of the previous year.

As we mentioned in the previous installment, the outlook for 2022 is for moderate growth, with various risks such as worsening of the pandemic and increasing political uncertainty in the country. Hope that doesn’t happen.

NL economy highlights

According to the information reported by INEGI, the GDP of Nuevo Leone in 2020 was 1,744,370 million pesos.

This places our unit on the third national position in this indicator with 8.0 percent of the national GDP. In front of Nuevo León are Mexico City and the state of Mexico.

On the other hand, during the third quarter of 2021, the companies located in our facility exported 10 thousand 571 million dollars, which is 9.7 percent of the total exports of the country.

In addition, Nuevo León’s industrial output grew at an annual rate of 3.5 per cent during August 2021, highlighting the manufacturing industry with a rate of 7.7 per cent in the eighth month of last year.

The author is an economist at UANL with a doctorate degree from ITESM’s Graduate School of Business Administration and Management (EGADE). He is Professor in UANL Faculty of Economics and a member of SNI-CONSAT.