Mexico Economic Forecast

Mexico Economic Outlook

May 17, 2016

Mexico’s economy was more resilient to external headwinds at the beginning of the year. Preliminary data show that GDP growth picked up from 2.5% year-on-year in Q4 2015 to 2.7% in Q1. The result, which exceeded expectations, was driven by faster growth in all three of the main sectors of the economy. Agriculture and services expanded robustly in Q1, while growth in the industrial sector was surprisingly faster, considering cutbacks in oil production and a slowdown in the U.S. economy in Q1. Moreover, manufacturing gauges in April suggest that the sector is off to a positive start to Q2. On a negative note, consumer confidence slipped further in April, suggesting that sentiment is losing traction, despite strong consumption fundamentals. In response to Moody’s warning in March that it could decide to downgrade Mexico’s rating, the government announced new expenditure cuts together with the guidelines for next year’s budget.

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Mexico Facts

ValueChangeDate
Bond Yield6.15-0.49 %May 25
Exchange Rate18.480.02 %May 25
Stock Market45,7110.47 %May 25

Mexico Economic Growth

May 17, 2016

Economic growth will be supported by strong private consumption this year. However, Mexico is facing a painful adjustment to low oil prices and weak demand for its manufactured exports. Analysts project Mexico’s 2016 GDP to be just a tick below last year’s 2.5% at 2.4%, which is unchanged from last month’s forecast. For 2017, growth is seen picking up to 2.8%.

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