Mexico’s economy grew at a slightly slower pace than the preliminary estimate in the second quarter, even as the country benefited from the strength of its trade with the US and its own robust consumption.
Gross domestic product expanded 0.8% from the previous three months, below the 1% median estimate by economists in a Bloomberg survey and the 0.9% preliminary reading reported last month. From the same period a year ago, GDP grew 3.6%, less than the preliminary 3.7% print, according to final data released by Mexico’s national statistics institute Tuesday.
The US has been feeding Mexico “via remittances, tourism, and imports, mainly of cars and SUVs,” said Gabriel Casillas, Barclays Plc’s chief Latin America economist. “Manufacturing companies have been relocating several lines of production from Asia and Eastern Europe to Mexico, mainly because of geopolitical tension.”
The slight downward revision is explained in part by the statistics agency’s change in the base year for comparisons. That modification contributed to the services sector’s downward revision to 0.7%, from 1% before, and the agricultural sector’s revision to 0.7%, from 0.8%. The industrial sector was revised upward to 1.2% compared to the prior three-month period.
Positive Outlook
Nevertheless, general optimism about Mexico’s economic outlook remains intact. Analysts in a Citi survey published last week said that they expect GDP to expand 2.9% this year, up from a forecast of 2% in early June. Economists in a Bloomberg survey in August see Mexico’s growth at the end of the year at 3%.
What Bloomberg Economics Says
“Monthly data for June and revised second-quarter GDP numbers show strong activity and domestic demand in Mexico. Below-consensus prints should moderate expectations, but still support a positive growth outlook. Data came in above central bank forecasts and signaled above-potential growth and little economic slack. That reduces the probability of interest-rate cuts this year. Government policies and tight monetary conditions are holding back growth, and a potential recession in the US is the main risk.”
— Felipe Hernandez, Latin America Economist
TYT Newsroom
