When will the US recession ‘hit’ Mexico? This is the Fitch forecast – El Financiero

Fitch Ratings forecasts mild recession for the American economy from the second quarter of 2023which will have a greater impact on Mexico and, in general, on the economies of Latin America and the Caribbean.

The agency warned that lower foreign demand of the world’s largest economy will affect its southern neighbor, which is extremely dependent on exports.

He specifies that Mexico allocates the equivalent of 30.8 percent of its GDP on exports to the United States, as the country with the greatest dependence in this sense. In contrast, Mexico sends only 7.4 percent of its GDP from exports to the rest of the world.

The main transmission channels to Latin America and the Caribbean are trade, remittances, tourism and commodity prices. Within these regions, different economic characteristics of countries mean that performance can vary significantly.

Fitch Baja US Prognostics

The agency made sharp cuts in its growth projections for the US economy in 2022 and 2023 due to the weakness of the data received; Federal Reserve tightening Much more aggressive than expected and economic recession in Europe.

“We are now projecting GDP growth from 1.7 percent in 2022, compared to 2.9 calculated in June. We also expect growth from 0.5 percent in 2023compared to the forecasted 1.5 percent in June,” he emphasized.

Fitch added that South American economies have limited trade ties with the US, but are indirectly affected through the impact on world trade and raw material prices.

In addition, weakening US household income and employment could threaten migrants’ ability to send remittances home and discourage tourism. Remittances represent more than 20 percent of the GDP of some Central American countries.

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