Mexico: Economic activity accelerates in July
September 25, 2013
Economic activity expanded 1.7% over the same month last year in July, according to the IGAE (Indicador Global de la Actividad Economica). The expansion contrasted the 0.4% decrease recorded in June and beat market expectations of a 1.2% rise, confirming that economic activity is showing signs of gaining momentum. However, analysts warn that the recent hurricanes that had hit both the Pacific and the Gulf coasts are likely to have some negative impact on growth in the third quarter.
According to the statistical institute, the acceleration observed in July reflected faster growth in services and in agriculture. Industry, however, contracted for a third consecutive month. A month-on-month comparison confirms the improvement suggested by the annual data. Economic activity expanded a seasonally-adjusted 0.5% over the previous month, which was up from the flat reading observed in June.
Meanwhile, the trend continues to point downward, with annual average growth in economic activity falling from 2.1% in June to 1.9% in July. This marks the lowest reading in three years.
The Central Bank (Banxico) expects the economy to grow between 2.0% and 3.0% this year. For 2014, the Bank left its growth projection unchanged at between 3.2% and 4.2%.
LatinFocus panelists see the economy growing 3.5% this year, which is unchanged from last month's forecast. The panel expects growth to pick up to 3.9% in 2014.
Author: Ricardo Aceves, Senior Economist