Background on the Mexican Economy and INEGI
The Mexican economy reported a second month of growth in September, but the expansion is expected to be weak according to estimates from the National Institute of Statistics and Geography (INEGI). The Indicador Oportuno de la Actividad Económica (IOAE) showed a mere 0.1% expansion in September compared to the previous month, mirroring August’s growth of just 0.1%. This follows a 0.9% decline in July.
Key Economic Sectors and Their Performance
Monex, a Mexican financial group, highlighted that both secondary and tertiary sectors experienced a decrease in dynamism as the third quarter concludes. The secondary sector, comprising industries like construction and manufacturing, saw a 1.7% annual decline from January to July, indicating fragility in these sectors.
The tertiary sector, which includes services, is also moderating its growth rate. This presents additional challenges to the third-quarter growth expectations.
Monthly and Annual Growth Comparisons
In comparison to the previous year, both August and September show a contraction of 0.6%. Monex’s analysts noted that the prevailing figures suggest a loss of momentum in major economic activity groups, especially those related to manufacturing industries.
The IOAE report revealed a general cooling in both secondary and tertiary sectors during September:
- Secondary Sector: Expected to grow by 0.1% monthly after a projected -0.3% in August. This sector includes industries such as manufacturing and construction.
- Tertiary Sector: Also expected to grow by 0.1% monthly in September, down from the projected 0.2% growth in August. This sector encompasses services.
Monex’s strategists emphasized the importance of monitoring the final IGAE figures for August, scheduled to be released on October 22nd, as they will confirm the extent of the ongoing deceleration.
Government and Market Growth Projections
The Mexican government anticipates an economic growth rate between 0.5% and 1.5% for the year, while market estimates and institutional projections hover around 1%. The recent IOAE report underscores the need for vigilance regarding these growth projections.
Key Questions and Answers
- Q: What does the recent IOAE report indicate about Mexico’s economic growth? A: The report suggests a slowdown in economic dynamism, with both secondary and tertiary sectors experiencing reduced growth rates. The overall expansion is projected to be weak, at 0.1% in September.
- Q: How do monthly and annual growth comparisons look for Mexico’s economy? A: Monthly, the secondary and tertiary sectors are projected to grow by 0.1% and 0.1%, respectively, in September, down from August’s projections of -0.3% and 0.2%. Annually, both monthly comparisons and the overall economy show a contraction of 0.6%.
- Q: What are the government and market expectations for Mexico’s economic growth this year? A: The government anticipates a growth rate between 0.5% and 1.5%, while market estimates and institutional projections average around 1%. However, recent IOAE data suggests the need for close monitoring of these projections.
