Tuesday, November 12, 2024

A cloudy economic forecast? Mexico shows 0% monthly growth in June

The Mexican economy grew just 0.9% in annual terms in June, according to preliminary data published by the national statistics agency INEGI on Friday.

On a month-over-month basis, the Mexican economy was stagnant, recording 0% growth in June.

Tourists take a selfie on a beach in Cancún
The tertiary or services sector, which includes tourism, is expected to show 1.6% annual growth in June, while the manufacturing sector saw a contraction. (Cuartoscuro)

INEGI said in a press release that final data is expected to show that the secondary or manufacturing sector of the economy recorded a 0.1% contraction in June compared to the same month of 2023.

Final data is expected to show that the tertiary or services sector grew 1.6% annually in June.

INEGI didn’t publish data for the primary or agricultural sector.

The 0.9% economy-wide annual growth rate in June represents a slowdown from a 1.2% expansion in May.

Analyst forecasts economic growth of 1.6% in first half of 2024 

Gabriela Siller, director of economic analysis at Mexican bank Banco Base, said on X that the latest economic data indicates that the Mexican economy grew 1.21% annually in the second quarter of the year and 0.12% compared to the January-March quarter.

“These figures are normally revised at a later date,” Siller acknowledged.

“… Considering possible revisions, the Base financial group estimates that the GDP of Mexico grew 0.20% quarterly and 1.29% annually in the second quarter,” she wrote.

Siller highlighted that Banco Base’s forecast annual growth figure for the second quarter would represent a slowdown from 1.93% growth in Q1. She also said that an annual growth of 1.29% in Q2 would be the lowest rate for any quarter since Q1 of 2021.

Construction Tren Maya
Mexico’s economic growth has been expected to slow in 2024, but forecasts are now even less optimistic based on the data published so far for the year. (Cuartoscuro)

If final data shows that the economy did in fact grow 1.29% annually in Q2, annual growth in the first six months of the year will be 1.61%, Siller said.

“This is concerning because in election years the Mexican economy [normally] grows more in the first half of the year. The only exception is 1988,” the Banco Base analyst wrote.

She forecast that annual economic growth this year will be 1.6%, down from 3.2% in 2023.

The pace of economic growth in Mexico is widely forecast to slow this year, in part due to a slowdown in the United States economy.

IMF lowers 2024 growth outlook for Mexico 

Earlier this week, the International Monetary Fund (IMF) revised downward its 2024 growth forecast for Mexico “due to moderation in demand.”

The IMF is now predicting that Mexico’s GDP will increase 2.2% this year, a reduction of 0.2 points from its previous 2.4% forecast.

imf
The IMF lowered its growth forecast for Mexico and also for the United States for 2024 after a “slower-than-expected start to the year.”(IMF)

The Washington-based financial institution is forecasting that the Mexican economy will grow 1.6% in 2025.

The IMF also cut its 2024 forecast for the U.S. economy — Mexico’s largest trade partner — lowering its growth projection to 2.6% from 2.7%. The downward revision reflects “the slower-than-expected start to the year,” the IMF said.

Other ‘need-to-know’ economic data for Mexico 

With reports from El Economista 

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