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Mexico Economic Activity July 2022

Mexico: Economic activity rebounds in July in month-on-month terms

The monthly indicator for economic activity (IGAE) rose 0.4% month-on-month in seasonally-adjusted terms in July (June: -0.3% mom), slightly above market expectations. The reading reflected a broad-based upturn, with activity in the services, industrial and primary sub-sectors all improving in July. That said, the economy remains slightly below its pre-Covid level.

On an annual basis, economic activity increased 1.3% in July, which was below Junes 1.5% expansion. The trend pointed down, with the annual average growth of economic activity coming in at an over one-year low of 1.5% in July, down from June’s 2.0%.

Despite Julys fairly positive data, our panelists see slower quarter-on-quarter growth in Q3 and Q4 compared to Q2. On the outlook, Goldman Sachs Alberto Ramos said:

“Rapidly diminishing returns from the covid normalization, high inflation, cost-push pressures, tight domestic and external financial conditions, moderating external demand, policy and regulatory uncertainty in key sectors (e.g., oil & gas and electricity), and soft business confidence, are likely to weigh on the broad economy.”

The LatinFocus panel projects the economy to grow 1.9% in 2022, which is unchanged from last months forecast. For 2023, the panel sees GDP growth at 1.5%.

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