Mexico: Growth continues to moderate amid waning base effect
March 22, 2011
A more complete set of data for GDP confirmed the fourth quarter's 4.6% expansion over the same period last year, as previously reported. The moderation over the 5.3% increase tallied in the third quarter reflected, in part, the waning of the favourable base effect that had boosted growth rates in previous quarters. The deceleration mainly reflected a worsening in the contribution of the external sector to overall growth, as imports slowed less markedly than exports, amid a more meaningful recovery on the domestic front. Imports moderated to a 15.5% expansion (Q3: +22.5% year-on-year), while exports slowed to a 15.4% increase (Q3: +27.1% yoy). Meanwhile, domestic demand accelerated from a 3.7% increase in the third quarter to a 6.2% expansion in the fourth quarter, driven by stronger growth in gross fixed investment. In contrast, total consumption slowed from a 4.4% increase in the third quarter to a 4.2% expansion, checked by weaker growth in both private consumption (Q3: +4.7% yoy; Q4: +4.6% yoy) and government spending (Q3: +2.6% yoy; Q4: +2.0% yoy). In the full year 2010, the economy grew 5.5%, which represents the strongest pace in over 10 years and contrasted the severe 6.1% contraction recorded in 2009. Going forward, the Central Bank anticipates the economy to grow between 3.8% and 4.8% in both this year and 2012.