Mexico: Second quarter growth confirmed
September 22, 2011
A more complete set of GDP data confirmed the previously reported 3.3% annual expansion in the second quarter. The reading came in below a 4.6% increase in the previous quarter and marked the slowest pace of expansion since the final quarter of 2009. Domestic demand softened from a 3.6% expansion in the first quarter to a 2.9% increase in the second. The deceleration was the result of an outright contraction in government consumption (Q1: +1.3% year-on-year; Q2: -2.6% yoy) and slower growth in private consumption (Q1: +4.9% yoy; Q2: +4.3% yoy). In contrast, gross fixed investment accelerated further and expanded 9.4%, which followed an already robust 7.7% increase in the previous quarter. The external sector also moderated the pace but continued to be supportive of growth, as a moderation in exports was partly offset by slower imports. In the second quarter, exports increased 8.1% (Q1: +14.1% yoy), while imports grew 6.8% (Q1: +10.9% yoy). As a result, the contribution from the external sector to overall growth fell from plus 0.9 percentage points in the first quarter to plus 0.4 percentage points in the second. Amid declining prospects for economic activity around the world, 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%.