The Day at a Glance | January 21 2022

The Top

*Mexico logged weak growth during December.

*U.S. Secretary of the Treasury Janet Yellen reiterated that she expects inflation to set at close to 2% by the end of 2022.

*Chinese authorities have called on the banking sector to increase credit after the economy`s weak start in 2022.

Economic environment

Weak recovery in Mexico. According to the INEGI`s Timely Indicator of Economic Activity (IOAE for its initials in Spanish), activity in the Mexican economy is estimated to log a (-) 0.2% annual contraction. Weakness in the economy during December is mostly explained by weak figures in the services sector, which is expected to recede (-) 1.3%, according to the INEGI`s timely indicator. This would be the second consecutive month in which a decrease is logged in the sector, after it logged a (-) 0.1% annual setback in November. Industrial activities could have improved during December; estimates forecast a 0.4% rate of growth. According to a report by Bloomberg, this would imply stagnation in the Mexican economy at the end of 2022, which would increase the likelihood of seeing a quarterly setback during the 4Q21, the second consecutive one after one was logged in the 3Q21. In other words, Mexico`s economy could have technically gone through a recession (defied as two consecutive quarters in which setbacks were recorded). It`s too soon to assure whether or not Mexico is in a recession; however, there is no doubt that growth during the end of 2021 was weak and that said weakness could extend into 2022. The economy is expected to log a rate of growth close to its potential 1.5-2% in the next year.