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Tuesday, January 31, 2023

Mexico expected to see limited economic impact from fuel crisis

2.2 % growth projected in 2019

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A gas station in Mexico City is closed as a result of the fuel shortage. Photo: Froteras

The Mexican economy will see a limited impact from recent fuel supply shortages, rating agency Moody’s Investors Service said Friday.

In a special report, the agency said that Mexico is projecting a growth of 2.2 percent for the economy in 2019 despite the recent fuel supply crisis caused by government’s plan to combat fuel theft.

“Like the effects of other transitory shocks, such as strikes, pandemics, and natural phenomena, the impact of fuel shortages on economic activity will normalize throughout the year,” the Moody’s report stated. “In the same way, it is unlikely that the crisis will have a significant impact on the fiscal and external accounts of the country.”

The administration of President Andres Manuel Lopez Obrador unveiled a plan soon after his induction in December to end fuel theft from pipelines.

The government’s plan included changing the mode of fuel distribution from pipelines to trucks, which has caused a gasoline supply crisis for consumers in some areas of the country, although the government has asserted that the situation is temporary.

A prolonged shortage could alter the logistics of Mexican companies that depend on distribution and supply chains. Most of these companies, however, are large and diversified, with operations outside central Mexico, compensating for the supply problems that the country has been experiencing since the end of December.

“Diesel fuel supplies that many trucks use have remained more stable than gasoline during the current crisis,” the agency said.

According to official estimates, the Mexican economy could grow between 1.5 percent and 2.5 percent in 2019.

Source: Xinhua

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