Mexico GDP (MXN bn)

GDP growth slows in Q4

According to a preliminary reading, GDP growth waned to 0.4% on a seasonally adjusted quarter-on-quarter basis in the fourth quarter, from 0.9% in the third quarter, marking the weakest reading since Q3 2021. Q4’s reading surprised markets slightly to the upside. Over 2022 as a whole, GDP expanded 3.0%.

The services sector grew 0.2% over the previous quarter in seasonally-adjusted terms in the fourth quarter, decelerating from the third quarter’s 1.1% increase. In addition, the industrial sector lost steam, growing 0.4% in Q4 (Q3: +0.6% s.a. qoq). The decelerations seen in the services and industrial sectors were likely explained by higher interest rates and the fading boost from the post-pandemic normalization of services activity. Primary sector growth was unchanged at 2.0% in Q4.

On an annual basis, economic growth waned notably to 3.5% in Q4, compared to the previous period’s 4.3% expansion.

On the outlook, Goldman Sachs’ Alberto Ramos said:

“Rapidly diminishing returns from the covid normalization, high inflation, cost-push pressures, tight domestic and external financial conditions, moderating external demand, policy and regulatory uncertainty in key sectors (e.g., oil & gas and electricity), and soft business confidence are likely to weigh on the broad economy in 1H 2023.”