Mexico Economic Activity July 2016


Economic activity moderates in July

July’s monthly proxy GDP (IGAE) produced by INEGI decelerated from a 2.2% year-on-year increase in June to a 1.3% expansion in July. Nonetheless, the moderation was less disappointing than the 1.0% rise the markets had expected. The expansion was supported by a 2.6% annual expansion in services and by a 3.8% rise in agriculture, which were dragged down by a sudden contraction in the industrial sector.

Sequential data showed that economic activity increased for the third consecutive month in July, albeit at a slower rate. The IGAE expanded 0.3% over June in seasonally-adjusted terms, which was half the growth rate seen in June.

All in all, July’s result suggests that GDP started Q3 on a weak footing, but the overall trend in economic activity remains broadly stable. Annual average growth in economic activity remained steady at June’s 2.4% in July.

In its most recent Inflation Report, the Central Bank (Banxico) trimmed its growth forecasts and now expects the economy to grow between 1.7% and 2.5% (previous estimate: 2.0% and 3.0%). For 2017, the Bank expects GDP to grow between 2.0% and 3.0% (previous estimate: 2.5% and 3.3%). According to the latest survey of analysts for the LatinFocus Consensus Forecast, panelists see the economy increasing 2.1% in 2016, which is down 0.2 percentage points from last month’s forecast. For 2017, the panel expects growth to pick up to 2.5%.

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Mexico Economic Activity Chart

Mexico Economic Activity July 2016 0

Note: Year-on-year changes and annual average growth rate of monthly economic activity in %.
Source: Mexico National Statistics Institute (INEGI)

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