Mexico’s economy grows 1% in the third quarter

Mexico’s economy grew 1% in the July-September period compared to the previous quarter, according to the quarterly estimate of the National Institute of Statistics and Geography (Inegi) published this Monday.

By sectors, the primary (which includes agriculture and livestock activities) advanced 1.8 percent; the secondary (related to industry) increased 0.9 percent, and the tertiary (which has to do with services) rose 1.2 percent.

With this, there are 3 of the last 4 quarters with growth for the national economy. So far in 2022, it’s up 1.1 percent in the first quarter and 0.9 percent in the second.

Quarterly growth was better than expected by analysts surveyed by Bloomberg, who expected a 0.8 percent growth.

At an annual rate, the comparison between the third quarter of 2022 with the same period in the previous year, the Gross Domestic Product of Mexico advanced 4.3 percent, according to Inegi data.

The growth of the third quarter was not enough for the Mexican economy to finish recovering what it lost in the pandemic crisis since the GDP is still 0.48 percent below that of 2019.

Last week, the Ministry of Finance not only maintained its 2.4 percent annual growth forecast for Mexico’s economy but suggested that this percentage may ultimately be “slightly higher.”

“In this sense, what we are observing for 2023 is that Mexico and the region (of North America) will continue to grow. Although the world could perhaps enter a stage of a potential economic slowdown, growth will continue to be positive in the case of Mexico,” said Undersecretary Gabriel Yorio.

The Treasury explained that the good performance of the economy during 2022 is based on a combination of the growth of formal employment with good levels of internal consumption, in addition to income from remittances and tourism.

The data comes in a context where the United States, Mexico’s largest trading partner, received good economic news, as US GDP grew 2.6 percent in the third quarter, its first advance so far in 2022.

Consumers proved resilient in the face of widespread US inflation and rapid interest rate hikes by the Federal Reserve, according to analysis of Commerce Department data.

“According to the timely GDP indicator, the economy grew 1 percent in the third quarter, a rate slightly higher than that anticipated by IGAE (0.9 percent). With this, the economy grew 2.7 percent in the first 3 quarters. If there is no growth in Q4, growth in 2022 would be 2.6 percent if there are no adjustments,” said Alfredo Coutiño, director of Moody’s Analytics.

“However, it is possible that the US economy will slow down significantly at the end of the year, which will limit the advance of the Mexican economy in the fourth quarter. European countries reported near-zero growth in the third quarter,” he added.

“The high growth of the third quarter of this year is due to a mathematical effect of a low base of comparison, since in the third quarter of last year, the GDP contracted 0.53 quarterly percent; rebound effect, since the Mexican economy has not finished recovering from the fall caused by the pandemic and the growth above estimates for exports and foreign direct investment due to nearshoring ”, commented experts from Banco Base.

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