Mexico: Economy grows at slowest pace since the recession
August 19, 2011
In the second quarter, GDP grew 3.3% over the same period last year, which came in well below the 4.6% increase tallied in the previous quarter and marked the slowest pace of expansion since the final quarter of 2009, the last contracted. The print undershot market expectations that had growth at 3.6%. Nonetheless, the sharp deceleration partly reflects an unfavourable base of comparison, as the economy soared an extraordinary 7.6% in same period last year. The moderation in annual terms was broad-based, as the three main sectors composing the economy ? agriculture, industry and services ? slowed over the previous quarter. In particular, the agricultural sector swung from a 2.2% expansion in the first quarter to a 3.7% decline. Moreover, the industrial sector, including construction, moderated to 3.4% increase amid a contraction in mining and weaker growth in manufacturing. Finally, the services sector decelerated from a 4.2% expansion in the first quarter to rise 3.6% in the second quarter, mostly reflecting a slowdown in commerce and a contraction in government services. A quarter-on-quarter comparison, however, does not point to a decline in economic activity as suggested by the annual data. On the contrary, according to seasonally adjusted figures the economy increased 1.11% over the previous quarter, which nearly doubled the 0.59% expansion observed in the previous quarter. Amid the ongoing deceleration in economic activity around the globe, especially in the United States, the Central Bank cut its growth projections for this year to between 3.8% and 4.8%, down from the previously expected range of between 4.0% and 5.0%. Next year, the Bank expects the economy to grow between 3.5% and 4.5% for.
Author: Ricardo Aceves, Senior Economist