Mexico: Large, Immediate Negative Impact and Weak Medium-Term Growth Prospects
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Figure 8.8. Mexico’s GDP: Observed, Potential, and Forecasts 11
forecast
10
2003 pesos, billions
9 8 7 6 5
19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 9 20 9 00 20 0 20 1 02 20 0 20 3 04 20 0 20 5 06 20 0 20 7 08 20 0 20 9 10 20 11 20 12 20 13 20 14 20 15
4
observed-forecasted St. Amant-Van Norden
Hodrick-Prescott Christiano-Fitzgerald
Source: Author’s estimates.
table 8A.7.) Figure 8.8 also shows the projected potential GDP lines that are consistent with our supply-side forecasts and using our three alternative estimates of potential output described above. The most remarkable characteristic of this projection is the downward shift in the evolution of both potential and projected output. This forecast is somehow consistent with the key stylized facts in IMF (2009d), and also with results described in IMF (2010). According to the former, after a crisis GDP does not return to its precrisis trend, although medium-term growth rates do tend to do so eventually. In the case of Mexico, medium-term potential output growth is projected to return to a 3 percent annual rate, which is precisely the growth rate projected to occur once the transition ends. Even though we assume a return to precrisis TFP growth rates, the expected postcrisis medium-term GDP growth rate (3.0 percent from 2014 on) is lower than those observed in the precrisis period (3.3 percent). Interestingly, the projected GDP