Mexico GDP

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Mexico: Economy loses steam in second quarter, but sequential data suggests improvement

September 19, 2014

In the second quarter, GDP increased 1.6% over the same quarter last year, which was slightly weaker than the 1.9% increase tallied in the first quarter (previously reported: +1.8% year-on-year) and overshot the 1.5% increase the markets had expected.

The print, which confirmed the initial estimate, showed that domestic demand slowed in the second quarter. Total consumption increased 1.4% annually in Q2 (Q1: +1.7% yoy), as private consumption decelerated and increased 1.2% (Q1: +1.5% yoy) and government spending grew 2.1% in Q2, which was down from the 2.9% expansion observed in Q1. Gross fixed investment contracted 0.5% in Q2, which marked the fourth consecutive quarter of contraction. Nonetheless, Q2’s drop in fixed investment was softer than the 0.7% contraction registered in Q1.

On the external front, growth in exports of goods and services slowed from 7.2% in Q1 to 5.8% in Q2. Imports increased 2.9% in the second quarter, which was slower than the 4.5% expansion registered in the first quarter. As a result, the net contribution from the external sector to overall economic growth increased from 0.8 percentage points in Q1 to 1.0 percentage points in Q2.

A quarter-on-quarter comparison does not corroborate the slowdown suggested by the annual data. GDP increased a seasonally-adjusted 1.0% in Q2, which more than doubled the 0.4% expansion registered in Q1.

The Finance Ministry expects the economy to grow 2.7% this year. The Central Bank (Banxico) expects the economy to grow between 2.3% and 3.3% in 2014 and between 3.2% and 4.2% in 2015. LatinFocus Consensus Forecast panelists’ projection is in line with the Bank’s assessment. They see the economy increasing 2.5% in 2014, which is unchanged from last month’s forecast. For 2015, the panel expects growth to pick up to 3.7%.


Author:, Senior Economist

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Mexico GDP Q1 2014 1

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


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