Mexico Economic Activity April 2017


Mexico: Economic activity decreases in April on calendar effect

June 26, 2017

The monthly proxy GDP (IGAE) produced by INEGI abruptly swung from a revised 4.3% expansion (previously reported: +4.4% year-on-year) to a 0.7% decrease in April, the worst reading since March 2013. However, a sizeable calendar effect related to the Easter holiday argues against reading too much into April’s headline figure. In fact, the decrease was somewhat smaller than the 0.8% drop market analysts had expected.

The main source of growth was once again the services sector, the expansion of which was nonetheless the slowest since August 2014 (April: +1.4% yoy; March: +4.9% yoy). The largest decrease was recorded in the commerce subcomponent, which swung from a 6.1% expansion in March to a 1.9% drop in April and suggests that private consumption could have moderated at the outset of Q2. Meanwhile, the secondary sector’s performance took a hit in April as it declined 4.4% from the same month of the previous year, its largest drop in more than seven years. The primary sector also swung from a 3.8% expansion in March to a 0.2% decrease in April.

Sequential data confirmed the one-off nature of April’s result. Economic activity increased 0.08% month-on-month in April, which contrasted March’s one-year-low of a 0.25% decline.

The Central Bank expects GDP to grow between 1.5% and 2.5% in 2017 and between 1.7% and 2.7% in 2018. According to the latest survey of analysts for the LatinFocus Consensus Forecast, panelists see the economy increasing 1.9% in 2017, which is up 0.1 percentage points from last month’s forecast. For 2018, the panel expects growth to pick up to 2.2%.

Author:, Economist

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