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Mexico Economic Activity July 2023

Mexico: Economic activity growth slows in July

The monthly indicator for economic activity (IGAE) expanded 0.2% in month-on-month seasonally-adjusted terms in July, which was a deterioration from June’s 0.5% increase. July’s weakening was due to a deterioration in the services sector and slower growth in the industrial sector. However, July’s reading was still the fourth straight month of expansion.

On an annual basis, economic activity increased 3.2% in July, which was below June’s 4.1% expansion. Meanwhile, annual average growth of economic activity was 4.1% in July, matching June’s reading.

July’s reading, although marking a slowdown from June, still bodes well for GDP in Q3 as a whole; our panelists expect a strong quarter-on-quarter expansion in the period.

On the outlook, Goldman Sachs’ Alberto Ramos said:

“Going forward, real activity is likely to face headwinds from high interest rates and fading contribution from the covid economic activity normalization. On the positive side, household spending is likely to benefit from robust workers remittances, firmer credit flows, robust labor market backdrop (including solid formal job creation) and moderating inflation.”

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