Mexico: Economic growth slows down markedly in first quarter
June 19, 2013
In the first quarter, GDP increased 0.8% over the same quarter last year, which represents a notable deceleration compared to the 3.2% expansion observed in the final quarter of 2012. The reading marks, in fact, the slowest pace observed since the last quarter of 2009. The reading was the result of a deterioration in both domestic demand and the external sector.
On the domestic front, total consumption decelerated from a 3.1% increase in Q4 to a 2.1% expansion in Q1, reflecting a slowdown in private consumption (Q4 2012: +3.6% year-on-year; Q1 2013: +2.6% yoy) and a deterioration in government spending (Q4: +0.2% yoy; Q1: -0.7% yoy). In addition, gross fixed investment swung form a 4.1% expansion in the fourth quarter to a 0.1% contraction in the first.
Exports of goods and services contracted 0.3% in Q1, which contrasts the 4.7% expansion tallied in the fourth quarter, while imports grew 1.3% in Q1, slower than the 5.0% increase registered in Q4. As a result, the net contribution from the external sector to overall economic growth deteriorated from minus 0.2 percentage points in the fourth quarter to minus 0.5 percentage points in the first.
On a sequential basis, GDP increased a seasonally adjusted 0.5% in the first quarter, which came in below the 0.7% expansion registered in the final quarter of 2012.
In its latest inflation report from May, the Central Bank maintained its forecasts of the economy growing between 3.0% and 4.0% this year and between 3.2% and 4.2% in 2014. LatinFocus Consensus Forecast panellists share the Bank's assessment and see the economy increasing 3.1% this year, which is down 0.2 percentage points from last month's forecast. For next year, the panel expects growth to pick up to 4.0%.
Author: Ricardo Aceves, Senior Economist