Introduction

2021/22 Introduction

Despite suffering a devastating economic blow following the COVID-19 pandemic, Mexico held its ground at the beginning of 2021. The country reported 11 percent growth in its GDP during 1Q21, thereby pointing to a presumed recovery. Investment helped to jumpstart the economy as vaccination campaigns allowed more people to return to the office. Moreover, the Labor Reform boosted formal job creation, favoring job security in the short run and retirement and financial security in the long-run.

The persistence of the COVID-19 pandemic, however, germinated new grievances, such as a shrinking workforce, supply chain disruptions and raw materials and inputs shortages, compromising industrial manufacturing, one of Mexico’s main economic drivers. The country’s performance was further hampered by the possible implementation of reforms involving the electricity and lithium markets, which have now become a roadblock to investor confidence.

While the energy reform has been in the air since the beginning of 2019, its now more tangible nature has damaged a once bountiful foreign investment sector. Final approval is still needed from Congress and after several back-and-forth rounds with the private sector, the reform is now looking at a balance between national sovereignty and economic development. In the meantime, investment uncertainty represents the greatest threat to Mexico’s economic recovery in both the short and long run.

After back-to-back quarters of negative growth in its GDP, the country now finds itself in a technical recession. Growth expectations for 2022 are moderate, below 3 percent for most analysts, with a great deal riding on the results of the final vote on López Obrador’s proposed reforms, scheduled for April at the latest, and the related talks between the public and private sectors.

As the country moves through a cautiously optimistic, yet challenging 2022, Mexico Business Review presents in-depth analyses, interviews and insights on the main challenges and opportunities facing the business sector. Regaining investment attractiveness, providing certainty to investors, improving the relationship between companies and the government and making the industry safer and smarter are paramount necessities on the road to recovery.