Key Economic Indicators and Sector Performance
In August, Mexico’s economy reported growth exceeding expectations for the month, according to data from the National Institute of Statistics and Geography (Inegi).
- Monthly Growth: The Indicador Global de la Actividad Económica (IGAE) showed a monthly variation of 0.6%, surpassing Inegi’s previous projection through the Indicador Oportuno de la Actividad Económica (IOAE), which projected a mere 0.1% growth.
- Second-Best Growth of the Year: This growth marked Mexico’s second-best performance this year, only slightly below February’s 0.8% monthly growth.
- Annual Comparison: In comparison to the previous year, economic activity showed zero growth in August following a 1.2% decline in July.
- Yearly Performance: Throughout the year, Mexico’s economy has displayed signs of cooling. Although a recession was initially predicted for the early months, economic activity remains weak.
Government and Market Projections
The Secretaría de Hacienda y Crédito Público (SHCP) forecasts that the economy will grow between 0.5% and 1.5% for the year.
Meanwhile, market consensus places itself at the lower end of the official projection range. The latest Citi Encuesta suggests a 0.5% growth rate for the year, with estimates ranging from Scotiabank and Valmex’s projected -0.1% contraction to Bankaool’s 0.8% growth.
Primary Activities Show Recovery
According to Inegi’s report, primary economic activities demonstrated the most significant expansion.
- Primary Activities: Focusing on agriculture, fishing, livestock, and similar sectors, these activities expanded by 14.5% compared to the previous month after a 3.2% decline in July.
- Tertiary Activities: Comprising services, these activities also recovered in August, albeit to a lesser extent. They grew by 0.5% monthly after a 0.4% decrease in July.
- Secondary Activities: Industries, which fall under secondary activities, reported their third consecutive month of decline. In August, they contracted by 0.3%.
Key Questions and Answers
- What does the 0.6% monthly growth mean for Mexico’s economy? This growth surpasses initial projections and indicates a positive trend in Mexico’s economic performance.
- How do different sectors contribute to this growth? Primary activities, such as agriculture and livestock, showed the most significant expansion. Tertiary activities, including services, also recovered but to a lesser extent. Secondary activities, encompassing industries, experienced their third consecutive month of decline.
- What are the government and market projections for Mexico’s economic growth this year? The Secretaría de Hacienda y Crédito Público (SHCP) forecasts a growth range of 0.5% to 1.5%. Market consensus, however, leans towards the lower end of this range.
