Nearshoring will not be the panacea for growth in Mexico: Barclays – El Sol de México

The arrival of foreign companies in Mexico, an economic phenomenon known as nearshoring, will not be the panacea for long-term economic growth, said Gabriel Casillas, chief economist for Latin America at Barclays.

“We do not think that it is the panacea and that with this the growth of Mexico is going to be unleashed. We believe that important structural reforms must be carried out in the country, for example in the rule of law”, highlighted the specialist at a press conference.

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According to Barclays projections, with nearshoring there is a potential for growth of between five and six percent at least in the next two years, but these levels will not be sustainable in the future as long as the rule of law is not improved and the energy sector is more efficient.

“Improving the rule of law implies many things, but it implies at least three: dignifying the police profession, increasing the number of judges, and the prison part, because more than a third of people still do not receive sentences,” Casillas pointed out.

For this year, the Ministry of Finance and Public Credit (SHCP) estimates that the Gross Domestic Product (GDP) will have an expansion of three percent, as a result of nearshoring and infrastructure projects of the current administration.

In April, Gabriel Yorio, undersecretary of the SHCP, assured that the Mexican economy has the potential to grow at this level, even in the face of a possible slowdown in the US economy.

“Probably the ones who are going to have to make adjustments in their growth estimates are the analysts or those who made a mistake in the estimate,” the official said at a conference on April 28.

Barclays forecasts stability in public finances at the end of the six-year term

Public finances will maintain their stability towards the end of the six-year term, added Gabriel Casillas, despite the high levels of inflation, the interest rate of the Bank of Mexico (Banxico) or a slowdown in consumption.

For the coming months, he added that the market already has discounted greater support for Petróleos Mexicanos (Pemex), although the administration has not said how it will be carried out.

Similarly, he mentioned that there is no concern of international investors for the electoral period in Mexico.

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“No one is worried about the period in Mexico, but rather the one in the United States, which can bring volatility. What we see is that for a process to be more democratic, it implies that it is more competitive and that is welcome”, concluded the chief economist for Latin America at Barclays.

2023-07-21 19:53:24
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