Mexico: GDP growth quickens in second quarter, but sequential data deteriorate
August 20, 2013
In the second quarter, GDP increased 1.5% over the same quarter last year, which marks an acceleration compared to the revised 0.6% expansion recorded in the first quarter (previously reported: +0.8% year-on-year). The reading came in well below both market expectations of a 2.3% rise and the Finance Ministry estimate of a 2.5% increase.
The improvement in economic activity was mainly led by a rebound in agriculture (Q1: -0.7% yoy; Q2: +1.3% yoy) and faster growth in services (Q1: +1.9% yoy; Q2: +2.6% yoy). Conversely, the industrial sector contracted in the second quarter, albeit a slower pace than in the first quarter (Q1: -1.7% yoy; Q2: -0.6% yoy).
Sequential data, however, suggest a deterioration in the second quarter. GDP contracted a seasonally adjusted 0.7% over the previous quarter, which was below the flat growth reported in the first. The print marks the first drop in economic activity in nearly four years.
Due to the fact that the second quarter expansion was weaker than expected, the Finance Ministry lowered its growth projections for this year and now expects the economy to expand 1.8%, which is well below its previous estimate of 3.1%. The Central Bank (Banxico) expects the economy to grow between 2% and 3% this year. For 2014, the Bank sees economic growth between 3.2% and 4.2%.
LatinFocus Consensus Forecast panellists projection is inline with the Bank's assessment. They see the economy increasing 2.8% this year, which is down 0.1 percentage points from last month's forecast. For next year, the panel expects growth to pick up to 3.9%.
Author: Ricardo Aceves, Senior Economist