As the final stretch of the administration of President Peña Nieto is outlined, it seems that the stars begin to align in economic matters. During the last few days, a series of economic indicators have been published that show a relative improvement in various topics, such as inflation, the external sector and public finances, to name a few. But let’s go in parts.
Regarding the increase in prices, it is known that the fortnight of January registered an annualized inflation rate of 5.51%, marking with it what will surely be a downward trend in this indicator, after remaining during eight consecutive months by over 6%. There is a notable drop in both the underlying index (the main source of pressure in the general index) and the underlying index to a lesser extent, although confirming a downward trajectory.
Although to a large extent this decline is due to the arithmetical effect of the high comparison base against which current prices are being compared, it should be noted that the inflationary peak has already fallen behind and will gradually begin to give way, relieving the Bank of Mexico of pressure to restrict monetary conditions.
On the subject of public finances, last Wednesday, January 30, the Ministry of Finance released the “Report on the Economic Situation, Public Finances and Public Debt”, corresponding to the fourth quarter of the previous year and with it the consolidated of all 2017
It stands out that the public deficit, measured through its broader indicator, that of the Public Sector Financial Requirements (RFSP), stood at 1.1% of GDP, a balance considerably lower than that reported in 2016 of the order of 2.8 % and with respect to the estimated in the General Criteria of Economic Policy in 2.9%.
In addition to this, last year, for the first time since 2008, a primary surplus (difference between revenues and expenditures of the public sector before interest payments) equivalent to 1.4% of GDP was obtained. This indicator is used as a first approximation to evaluate the efforts of an administration to generate sufficient savings to cover the debt service.
With all the above, there was a decrease in the level of public debt, standing at 46.2% of GDP, compared to 48.7% registered in 2016. This figure taken from the broader indicator of public debt, the Historical Balance of the Financial Requirements of the Public Sector. It should be noted that this is the first decrease in this indicator observed in the last ten years.
The challenge will be that during the fiscal year, the government maintains discipline and moves away from the temptations of spending public spending on full electoral campaigns ”
Of course, all of this is supported in good part by the remaining operations of the Bank of Mexico, which totaled 321 thousand 700 million pesos. The challenge ahead will be for the moment that during the current fiscal year, the Government maintains this fiscal discipline and moves away from the temptations of spending public spending in full electoral campaigns.
With regard to the external sector a couple of weeks ago, INEGI reported that far from the threats and uncertainty that loom in commercial matters, the external sector showed a strong boost during the past year, registering both exports and imports. of growth of the order of 9.5% and 8.6% respectively. The foregoing shows a vigorous dynamic with growths well above that registered by the economic activity as a whole.
To close and no less important, last year’s GDP growth rate, in its timely estimate released by the INEGI last week, was 2.3% with seasonally adjusted figures, marking a slight deceleration in relation to the pace of growth that had been registered in the last four years. However, the International Monetary Fund raised its outlook for growth in the Mexican economy for both 2018 and 2019, adjusting its projections from 1.9% to 2.3% and 2.3% to 3% respectively.