The Mexican economy is set to finish 2023 on a high note, propelled by an impressive resurgence in consumer spending. According to the Timely Indicator of Economic Activity (IOAE), the Gross Domestic Product (GDP) reported a substantial growth of 4% in June, surpassing the 3.6% growth observed in May, and even outpacing the predictions by a significant margin.
This robust economic performance marks the most impressive since last October when the economy experienced a 4.8% growth spurt, says the National Institute of Statistics and Geography (Inegi).
Delving into the specifics, this promising GDP growth in June was driven by increased momentum in the tertiary or services sector, which advanced by an impressive 4.3% in June, its best performance since the start of the year. Industrial activities, meanwhile, saw a 2.8% growth in the same month. This particular indicator, excluding primary activities, provides valuable early estimates for the Global Indicator of Economic Activity (IGAE).
Private consumption, a pivotal driver of the economy, maintained its robust performance for the third consecutive quarter, posting growth rates of 4%. This healthy economic activity was bolstered by low unemployment levels, record remittance inflows amounting to $5,693 million in May, and a slowdown in inflation.
Gabriela Siller, director of Banco Base Analysis, suggested that the Mexican economy may have grown at a quarterly rate of 1.09% and an annual rate of 3.65% in the second quarter of 2023. However, she stressed the ongoing challenges presented by a high rate of labor informality and a lag in the growth of gross fixed investment.
Gabriel Yorio, the Undersecretary of the Treasury, has forecasted more than 3% growth for the Mexican economy in 2023. He cited the phenomenon of nearshoring and a lesser risk of recession in the United States as key contributors. Baja California and Coahuila are witnessing this nearshoring impact, with land prices for industrial buildings rising.
However, despite this positive domestic outlook, the International Monetary Fund (IMF) offers a more conservative estimate of 1.8% for the Mexican economy in 2023 and predicts it will slow down to 1.6% in 2024.
President Andrés Manuel López Obrador lauded the economic uptick in his regular morning conference. He emphasized how the economy is bouncing back following the pandemic-induced slump, in part because his Administration refrained from accruing debt to tackle the crisis, a move he contends sets Mexico apart from other nations.
