Mexico’s economy exceeded growth forecast in April

June 26, 2023

Workers on Maya Train — The national statistics agency INEGI reports that economic activity grew 0.8% from March to April, the best month-on-month growth for over a year. (Shutterstock)

Mexico in April recorded its strongest month-over-month economic growth in more than a year, official data shows.

The national statistics agency INEGI reported Monday that the Global Indicator of Economic Activity (IGAE), which measures gross domestic product on a monthly basis, increased 0.8% in April compared to the previous month.

Economic activity in the primary sector (including agriculture) increased 1.2% from March to April. (Secretaría de Trabajo)

It was the best result since March 2022, following a 0.2% month-over-month contraction in March. The 0.8% growth figure easily exceeded the expectations of analysts from Citibanamex, who forecast a 0.4% month-over-month increase.

Seasonally adjusted figures show that primary sector economic activity increased 1.2% in April compared to March, secondary sector activity grew 0.4% and tertiary sector activity expanded 1%.

The annual increase on the IGAE based on seasonally adjusted figures was 3.3%, INEGI said.

Andrés Abadia, chief Latin America economist at the U.K.-based Pantheon Macroeconomics, attributed the strong economic result in April to a range of factors, including the strength of the labor market, the decline in inflation, the federal government’s welfare spending and the growing nearshoring phenomenon.

The Yinlun Salinas Cruz factory under construction in 2022 — A factory in Salinas Victoria, Nuevo León – seen here under construction in 2022 – is part of a wave of nearshoring by manufacturers looking to strategically access the North American market. (Hofusan Industrial Park/Twitter)

“These drivers [of economic growth] have completely offset the impact of tighter financial conditions and the weakening of external demand,” he said.

The publication of the final economic data for April comes a week after INEGI released preliminary figures for May showing month-over-month and annual growth of 0.1% and 2.5%, respectively.

Mexico’s economy grew 3.1% in 2022, while President López Obrador recently asserted that GDP will expand by 4% this year. Earlier this month, the World Bank updated its 2023 growth forecast for the Mexican economy to 2.5%, a significant improvement from the 0.9% prediction it made in January.

With reports from El Economista, La Jornada and El Financiero