Mexico Economic Activity February 2017


Mexico: Economic activity hits the brakes in February

April 24, 2017

February’s monthly proxy GDP (IGAE) produced by INEGI decelerated sharply from a 3.0% year-on-year increase in January to a tepid 1.0% expansion, the lowest reading in nearly a year. The result, however, overshot market expectations of a more pronounced slowdown to 0.8%. The print reflected a sizeable decrease in the industrial sector, which partially offset robust dynamics in the agricultural and services sector. When adjusted by calendar effects, economic activity still grew a respectable 2.2% (January: +2.5% year-on-year). This argues against reading too much into this month’s headline figure.

Sequential data confirmed the moderation suggested by the annual data. Economic activity increased a seasonally-adjusted 0.1% from the previous month in February, a deterioration from the 0.3% increase seen in January and the lowest reading in half a year.

Despite January’s moderation, economic activity data for the two first months of the year suggest a solid start to the year. The quarter is also likely to close on an upbeat note, as a calendar effect from Easter Holidays implies more working days in March. Nonetheless, the annual average growth in economic activity edged down from 2.3% in January to 2.1% in February, the worst result since November 2014.

In its Inflation Report from March, the Central Bank (Banxico) stated that it expects the economy to grow between 1.3% and 2.3% in 2017. For 2018, the Bank expects the economy to grow between 1.7% and 2.7%. According to the latest survey of analysts for the LatinFocus Consensus Forecast, panelists see the economy increasing 1.5% in 2017, which is down 0.1 percentage points from last month’s forecast. Going forward, GDP growth is projected to pick up to 2.1% in 2018.

Author:, Economist

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