Mexico: Growth softens in second quarter but remains robust
September 14, 2012
In the second quarter, GDP increased 4.1% over the same period last year. The figure came in below the 4.5% expansion recorded in the preceding quarter but was just in line with last month's LatinFocus Consensus Forecast. The moderation in the second quarter reflected a deceleration in the domestic sector. Total consumption slowed to a 3.1% year-on-year increase, which was below the 4.0% expansion seen in Q1. reflecting softer growth in both private consumption (Q1: +4.3% year-on-year; Q2: +3.3% yoy) and government consumption (Q1: +2.5% yoy; Q2: +1.7% yoy). In addition, growth in fixed investment weakened from an 8.8% increase in the first quarter to a 6.2% expansion in the second. In contrast, the net contribution from the external sector to overall growth swung from minus 0.6 percentage points in the first quarter to 0.7 percentage points in the second quarter, as exports outpaced imports. Growth in imports moderated from a solid 7.1% in Q1 to 4.0% in Q2, whereas growth in exports picked up from 5.3% in Q1 to 6.3%. At the sector level, the deceleration was the result of weaker growth in industry and services, which expanded 3.6% (Q1: +4.4% yoy) and 4.4% (Q1: +4.8% yoy) respectively. In contrast, agriculture expanded a strong 9.5%, which came in well above the 5.5% increase tallied in the first quarter. A quarter-on-quarter comparison corroborates the moderation suggested by annual figures, as in the second quarter the economy grew 0.9% in seasonally adjusted terms, which came in below the 1.2% expansion recorded in the first quarter. In its latest inflation report from August, the Central Bank expects GDP to grow between 3.25% and 4.25%.