Mexico Economic Activity March 2017


Mexico: Economic activity soars in March on calendar effect

May 22, 2017

The Mexican economy continues to dispel fears that Trump’s anti-trade rhetoric, mounting inflationary pressures and a decline in oil production will weigh heavily on economic activity. In March, the monthly proxy GDP (IGAE) produced by INEGI accelerated from a lackluster 0.9% increase to a 4.4% expansion, the largest since November 2012 and slightly above market expectations of a 4.2% increase.

The print reflected a sizeable upswing in secondary production, which, on the heels of stronger manufacturing activity, expanded at the fastest rate since December 2014. The industrial sector grew 3.4% in annual terms in March (February: -1.9% year-on-year). Upbeat dynamics were also observed in the services sector, which accelerated to a 5.0% rise in March from a 2.2% increase in February. This marked the best figure since April 2013. Meanwhile, the primary sector experienced a mild acceleration, from 3.6% in February to 3.8% in March.

Sequential data, however, paint a very different picture. Economic activity declined 0.25% month-on-month in March, which was worse than the 0.06% decrease observed in February. This marked the lowest reading in nearly a year.

Economic data for the first three months suggest a solid start to the year, as confirmed by GDP growth data for Q1. Nonetheless, March’s economic activity was heavily influenced by the calendar effect from the Easter holiday, which implied more working days in March. Hence, a deceleration in activity is expected in the months to come, as reflected by our panel’s projections for GDP in Q2.

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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Mexico Economic Activity Chart

Mexico Economic Activity March 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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