Mexico GDP


Mexico: Domestic demand continues to fuel economic growth

March 23, 2015

In the fourth quarter, Mexico’s GDP increased 2.6% over the same quarter last year, which marked a slight acceleration over the 2.2% increase observed in the previous quarter, but fell short of the 2.7% the markets had expected. Mexico’s gross domestic product increased 2.1% in 2014, which came in above the 1.4% expansion observed in 2013.

Q4’s print reflected that domestic demand improved on the back of strong growth in private consumption and fixed investment. The external sector also contributed to overall economic growth as exports of goods and services increased at the fastest pace in nearly four years. On the domestic front, private consumption grew 2.7% annually in Q4, faster than the 2.2% increase tallied in Q3. Fixed investment expanded a healthy 5.8% in Q4 (Q3: +4.3% year-on-year), while government consumption growth decelerated from 3.2% in Q3 to 1.9% in Q4.

On the external front, exports of goods and services accelerated from a 7.1% expansion in Q3 to a 10.3% increase in Q4. Exports growth was the fastest since Q1 2011. Imports also picked up pace from a 6.0% increase in Q3 to an 8.1% expansion in Q4, which also confirms the recovery in domestic demand. Consequently, the contribution from net exports to overall economic growth rose from 0.3 percentage points in Q3 to 0.8 percentage points in Q4.

A quarter-on-quarter comparison confirms the improvement suggested by the annual data. GDP expanded a seasonally-adjusted 0.8% in Q4, which was above the 0.3% rise seen in Q3.

Mexico’s Central Bank (Banxico) revised Mexico’s growth forecasts and now expects the economy to grow between 2.5% and 3.5% in 2015 (previous estimate: between 3.0% and 4.0%). For 2016, the Bank also lowered its projections and now sees the economy growing between 2.9% and 3.9% (previous estimate: between 3.2% and 4.2%). LatinFocus Consensus Forecast panelists’ projection is in line with the Bank’s assessment. They see the economy increasing 3.0% in 2014, which is down 0.2 percentage points from last month’s forecast. For 2015, the panel expects growth to pick up to 3.5%.

Author:, Senior Economist

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Mexico GDP Chart

Mexico GDP Q4 2014 0

Note: Year-on-year changes of GDP in %.
Source: Mexico National Statistics Institute (INEGI)

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