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.

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.

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.

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 

• The USD:MXN exchange rate was 18:04 at 11 a.m. Mexico City time on Thursday, according to Bloomberg.
• The annual headline inflation rate was 4.98% in June, its highest level in 12 months.
• The Bank of Mexico’s benchmark interest rate is set at 11%. The central bank’s board will hold its next monetary policy meeting on August 8.
• In the first six months of 2024, private companies announced plans for more than US $45 billion in investment in Mexico, according to the federal Economy Ministry.
• Mexico’s revenue from exports to the United States hit an all-time high in May, increasing 6.1% in annual terms to almost US $44 billion.

With reports from El Economista