Economy would spin two months of expansion in October

The Mexican economy would spin its second month of growth in October, this after the 1.6% monthly drop that it showed last August, in the middle of the third wave of Covid-19, according to data released by the National Institute of Statistics and Geography (Inegi).

The Timely Indicator of Economic Activity (IOAE) foresees that by October the economy will have presented a monthly growth of 0.6%, with which it would register its second consecutive month with a positive rate, since for September it is expected to have been 0.3 percent.

“Although a base effect explains part of the recovery, we believe that there are several driving factors, with better epidemiological conditions and greater mobility,” Banorte said in an analysis.

Inegi’s forecast is that, in the worst scenario, there will be a monthly contraction of 0.6% in October while, in a more positive scenario, the growth of economic activity will be up to 1.8 percent.

In its annual comparison, the IOAE expects the growth rate to be 1.9% in October, slightly lower than the 2.8% in September. The expected growth in a lower range would be 0.7% per year, while a higher rate would be up to 3.1 percent.

“The signs for the end of the year appear to be stronger, with signs of an acceleration in the recovery, in turn consistent with our expectation of an annual advance of 5.7% in all of 2021”, mentioned the Banorte strategists.

Industrial boost

The Inegi report –which only gives the forecasts of secondary and tertiary activities, since it is given two weeks after the end of the month, – showed that the recovery of the economy would take place thanks to a boost in the industrial sector.

According to the IOAE, in October the industries would show a growth of 1.1% per month, with which they would try to reverse the fall of 2.7% that is forecast for September.

In the case of the services sector, the growth rate would accelerate slightly from 0.5% in September to 0.8% in October.

“The industry would rebound at the margin, consistent with signs of greater dynamism at the global and local levels, although with activity still limited. For their part, services would rise 0.8%, helped by an improvement around the pandemic that would drive an acceleration in consumption, ”explained Banorte.

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