Mexico: Economic growth loses momentum in Q1
May 21, 2015
At the outset of 2015, Mexico’s economy lost momentum mainly due to slower growth in the industrial sector, especially in the manufacturing sector. GDP in Q1 increased 2.5% over the same quarter last year, which came in below the 2.7% expansion registered in Q4 2014. Still, Q1’s print overshot the 2.4% increase the markets had expected.
The slowdown in Q1 reflected the fact that growth in the industrial sector fell to a one-year low. Industry increased 1.4% annually in Q1, which came in below the 2.4% rise observed in Q4. Weaker growth in manufacturing and a slowdown in construction dragged on growth in the secondary sector. Conversely, agriculture accelerated from a lackluster 1.4% increase in Q4 to a notable 6.8% expansion in Q1. Services maintained the pace of growth at Q4’s 2.9% in Q1.
A quarter-on-quarter comparison confirms the slowdown suggested by the annual data. GDP increased a seasonally-adjusted 0.4% in the first quarter, which was down the 0.7% rise observed in the last quarter of 2014.
In May, Mexico’s Central Bank (Banxico) revised Mexico’s growth forecasts and now expects the economy to grow between 2.0% and 3.0% in 2015 (previous estimate: between 2.5% and 3.5%). For 2016, the Bank also lowered its projections and now sees the economy growing between 2.5% and 3.5% (previous estimate: between 2.9% and 3.9%).
Author: Ricardo Aceves, Senior Economist