Outlook

International

The International Monetary Fund (IMF) has downgraded its growth projection and issued a warning about the various risks ahead.

The pandemic and the Russian invasion of Ukraine continue to have a devastating impact on the global economy. Inflation has risen to 6.6% in advanced economies and 9.5% in emerging and developing economies, while global output growth has slowed to 3.2% this year. The world’s three largest economies (United States, China, and Europe) are slowing down.

The total disruption of Russian gas supplies to European economies, according to the IMF, may have negative effects in Europe and "substantially boost inflation" with rising energy costs.

The IMF urged European governments to take measures to combat inflation, such as tightening monetary policy. While the U.S. economy is not expected to enter recession this year or next, the IMF also warned that a "small shock could be enough" to trigger one.

The U.S. economy will expand 2.3% this year and 1% next year, according to the IMF as of June. These projections lower the April estimates by 1.4 and 1.3 points, respectively.

National

Despite a more complicated global situation, the outlook for Mexico is stable. The Federal Government is expected to pursue economic strategies that will produce stable budgetary and debt dynamics.

Over the next two years, investor confidence and investment could weaken and there could be a downgrade if there are unanticipated setbacks in macroeconomic management or negotiations among USMCA partners to improve supply chain resilience and cross-border linkages. Rising general government debt and deficits could result in a downgrade, as well as increasing fiscal risks related to any exceptional support required for PEMEX and CFE.

During the second quarter, inflation continued to rise and reached new highs and at the end of the second quarter (in June), the headline inflation rate was 8.0 percent on annual basis (+0.6 percentage points compared to the end of 2021 and 5 percentage points above Banxico's target).

Industry

The prices of construction materials increased 49% in Mexico during the first half of 2022, due to supply bottleneck problems caused by the COVID-19 pandemic and the conflict between Russia and Ukraine. Nevertheless, according to data from the Mexican Association of Real Estate Professionals (AMPI for its Spanish acronym), the sector is expected to have a growth of at least 20% driven by housing sales.

However, with the publication by Infonavit of the Survey of Credit and Housing Needs for the second quarter of 2022, the Housing Purchase Intention Index continues to rise, as it increased by around 13 points compared to the first quarter of this year.

As of 2023, the FOVISSSTE, will attend to credit demands on a permanent basis, thus making the process more efficient and people will be able to access credit whenever necessary through the Traditional credit granted by this institution.

Furthermore, despite recent interest rate increases by the Mexican Central Bank, Infonavit will not increase the interest rates of its credit products in the short and medium term.