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.
Author: Ricardo Aceves, Senior Economist