Mexico Economic Forecast

Mexico Economic Outlook

August 9, 2016

The economy lost traction in Q2, as expected. An advance estimate showed that GDP increased 2.4% year-on-year in Q2 (Q1: +2.6% yoy) and on a quarterly basis it contracted a seasonally-adjusted 0.3%, which suggests a sharper economic deterioration. Meanwhile, the latest round of PMIs showed that weakness persisted in the manufacturing sector at the outset of Q3 as the IMEF manufacturing indicator and the manufacturing PMI dropped further in July. The National Statistics Institute (INEGI) released a Socio-economic Survey with a new controversial methodology that showed household income improving over the past year, particularly for the poor. Concerns about political influence over INEGI have been growing since the president handpicked the institute’s head. In fact, the July consumer sentiment survey showed that households remain overly pessimistic, since they continue to see the country’s economic situation getting worse, and thus their own economic prospects.

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Mexico Facts

ValueChangeDate
Bond Yield6.020.50 %Aug 03
Exchange Rate18.88-0.29 %Aug 03
Stock Market46,8450.61 %Aug 03

Mexico Economic Growth

August 9, 2016

The economic forecasts for Mexico suggest that policy tightening—both fiscal and monetary—along with downward-spiraling oil production will weigh on growth this year. Moreover, volatility in the exchange rate is expected to continue on the back of Brexit jitters. Analysts expect the economy to expand 2.3% this year, which is down 0.1 percentage points from last month’s forecast. Next year, the economy is projected to accelerate to a 2.6% expansion.

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