Mexico Economic Activity August 2017


Mexico: Economic activity regains its footing in August

October 24, 2017

The monthly proxy GDP figure produced by the National Statistics Institute (INEGI) showed a 2.3% expansion in annual terms in August, a marked improvement over the 1.0% increase recorded in July.

The pick-up in economic activity reflected brisk annual growth of 4.0% in the services sector. This was well above the 2.4% increase recorded in July and reflected improved dynamics among both external and domestic-oriented service providers. Meanwhile, the industrial sector contracted a more moderate 0.5% in August (July: -1.4% year-on-year) as robust manufacturing activity partially offset a decrease in construction and mining activity. Conversely, growth in the agricultural sector plunged from a 2.0% increase in July to a 4.1% decrease in August.

On a month-on-month basis, economic activity bounced back from a 0.7% seasonally-adjusted contraction in July to a 0.8% increase in August, the strongest figure since May 2016. Although the earthquakes that struck the country in September have disrupted economic activity in the affected areas, August’s robust print suggests Mexican economic growth was resilient prior to the natural disasters.

The Central Bank (Banxico) expects the economy to grow between 2.0% and 2.5% this year. Next year, the Bank sees economic growth at between 2.0% and 3.0%. Our panel expects the economy to grow 2.1% in 2017, which is from last month’s forecast. Going forward, GDP growth is projected to pick up to 2.3% in 2018, which is from last month’s estimate.

Author:, Economist

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