Treasury rules out recession in the US and reaffirms financial support for Pemex

“There is still talk of a potential risk of recession in the US, however, rather than a recession, it seems to me that there will be a slow and smooth decline in economic activity, but it would probably happen at the end of this year or at the beginning of the next, and this probability has been decreasing as new economic information has been presented,” said the official during the presentation of the Report on Finance and Public Debt for the closing of the fourth quarter of 2022.

He explained that manufacturing production in the United States grew 3.1% according to the latest figures, which is why the manufacturing sectors and those derived from it in Mexico are recovering, in addition to exports.

“Mexico is growing above its historical average, in the accumulated to November, practically this growth has been driven by increases in almost all sectors, as well as high levels of employment and also growth in private consumption,” said Yorio.

In addition, in 2022 growth was above the consensus of several analysts, who in the middle of last year forecast growth between 1.6%-1.8%, while growth is being seen between 2.9 and 3.0%, he added.

He considered that there is currently an “unusual divergence, between decision makers, such as business owners and investment, against which some analysts have, this divergence that is being observed, is leading Mexico to be one of the countries with the most revisions to the increase in its economic growth.

He stressed that the relocation of companies, which took place as a result of the pandemic, has benefited Mexico, and that there are already 400 firms interested in investing.

Support for Pemex

The recovery that looks gradual, and a high price for oil around the world, will contribute to the economy and public finances, which in turn will contribute to the financial and fiscal support that has been given and will continue for Pemex, from of the federal government.

“Pemex is one of the great public assets that the federal government has, we will continue to have a significant flow of oil income that helps the budget to face the different challenges of economic and social policy that the country has. This administration is the one that most has supported Pemex, and we will continue to do so,” said the undersecretary.

He explained that in the first four years of the current government, a mix of actions have been pushed to support the oil company, such as the reduction of the Shared Utility Right, which was at 65% and was reduced to 40%, and that this percentage expects to keep this 2023, 2024 and until later years.

“This has been achieved because it has been possible to increase the income of the public sector, the income of the federal government and absorb part of the flow, release part of the flow for Pemex. This flow represents between 3,000 and 4,000 million dollars per year for the company public, and they have it incorporated into their financial flow,” he said.

He ruled out that the support could affect Mexico’s credit rating, by the three main risk rating agencies: Moody’s, Fitch and S&P.