In February, private consumption in Mexico expanded 1.3% compared to January, marking eight months of progress and consolidating its recovery trend compared to pre-pandemic levels, according to figures reported by the National Institute of Geography. and Statistics (Inegi).
Within the variable, growth was expressed in its two components, the most dynamic being that of imported products (+6.2%), leaving in the background that of goods and services of national origin (+1.1%), although this The last line is the one with the highest weight.
The dynamics of private consumption –the largest component of aggregate demand– contrasted sharply with that of fixed investment –a smaller component in size, but with a greater impact on long-term growth–, which fell 3% during February.
“Despite an increasingly challenging base, the environment for this category has continued to improve, with special support from: (1) The rapid decrease in infections, helping to consolidate mobility; (2) a recovery in employment, with remittances maintaining strength and consumer credit on the rise; and (3) the beginning of the early delivery of resources from some social programs due to the electoral ban,” Juan Carlos Alderete, director of economic analysis at Grupo Financiero Banorte, explained in a report.
The level of private consumption measured by the Inegi last February reached a historical maximum, with a reading of the corresponding index of 119.1 points, 1.5% higher than that observed in February 2019.
Cumulatively, in January and February, with original figures, private consumption still shows a slight drop, of 0.3%, compared to the same period in 2019, prior to the outbreak of the Covid-19 pandemic.
“Domestic consumption is positioned as the most important factor of economic growth at the beginning of 2022, which prevented the debacles in the open economy and investment from translating into stagnation or even contraction, as happened in the United States,” said Marcos. Arias, analyst at Grupo Financiero Monex.
Private consumption is the most important component of aggregate demand in Mexico and last year it represented 64.6 points of GDP, an advance of 1.5 points compared to 2020.
Amid the economic tension due to the war in Ukraine and the inflationary shocks fueled by that conflict and the slow recovery of supply chains after the impact of Covid-19, consumption has shown signs of resilience, but the outlook is challenging .
“Signs from domestic demand and the rest of the economy are becoming more challenging, especially with higher investment risks. Despite this, we expect consumption to be more favorable, playing a more important role in the year’s growth”, said Juan Carlos Alderete, director of Economic Analysis at Grupo Financiero Banorte.