Mexico Economic Activity January 2017


Mexico: Economic activity shows positive surprise in January

March 27, 2017

January’s monthly proxy GDP (IGAE) produced by INEGI accelerated from a 2.1% year-on-year increase in December to a robust 3.0% expansion. The result overshot the 2.0% increase the markets had expected and reflected a substantial increase in the agricultural sector (January: +12.8% yoy; December: +4.9% yoy) and an acceleration in services. Conversely, the industrial sector continued to disappoint, as it contracted for the second consecutive month.

Sequential data confirmed the positive developments suggested by the annual data. Economic activity increased a seasonally-adjusted 0.3% from the previous month in January, which followed a 0.4% expansion in December.

All in all, January’s result in economic activity, along with other economic indicators, suggest that GDP gained further momentum in Q1, following Q4’s acceleration. The trend has remained consistent, as the annual average growth in economic activity inched up from 2.2% in December to 2.3% in January, which suggests that this is Mexico’s “new normal” growth rate.

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:, Senior Economist

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Mexico Economic Activity Chart

Mexico Economic Activity January 2017

Note: Year-on-year changes and annual average growth rate of monthly economic activity in %.
Source: Mexico National Statistics Institute (INEGI)

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