The Gross Domestic Product (GDP) of Mexico registered an advance of 0.9% between January and March, compared to the performance of the previous quarter, in real terms and with figures adjusted for seasonality, estimated the National Institute of Statistics and Geography (Inegi) in your timely information.
This quarterly advance in the Gross Domestic Product (GDP) from January to March, was recorded after the stagnation experienced by the economy in the last quarter of last year, whose null performance was presented after the contraction of 0.4% observed between July and September of 2021.
If this advance is confirmed in the final data of the Gross Domestic Product (GDP), to be disclosed on May 25, it could be said that the economy returned to the path of growth after the weakening of the second half of last year, commented the deputy director of analysis Economic in Go for More, Alejandro Saldaña Brito
According to the timely estimate of the Inegi, Mexico’s GDP had an annual growth of 1.6% compared to the last quarter of 2020, a performance that remained in line with the dynamics expected by the market consensus, which was at 1.6 percent.
As Mexico has explained, how are we doing? When comparing the timely estimate of GDP with the final data from Inegi, the difference is usually between 0.1 and 0.2 percentage points, which means that the timely estimate is usually “quite accurate”.
According to the deputy director of analysis at Grupo Financiero Monex, Janneth Quiroz, this record implies that economic activity remains 2.5% below that observed before the declaration of the pandemic.
Detailed information from Inegi reveals that the secondary and tertiary sectors, that is, industry and services, coincided in registering growth of 1.1%, while the primary sector contracted 1.9 percent.
Services and industry start engines
In the disaggregation of the timely information, the Inegi showed that the advance of the activity was led by the industrial and services sectors that had a quarterly record of 1.1 percent.
The Director of Economic Analysis of Banco Base, Gabriela Siller explained that both sectors represented 95% of the total economic activity of the country last year.
The expert highlighted that the tertiary sector, where services and commerce are grouped, registered its first quarterly positive growth rate after the contractions observed since July 2021.
The performance of this sector was also driven by greater activity in recreational, hotel and restaurant services as the population relaxed its precautionary measures due to the pandemic after the passage of the Ómicron variant, the expert explained.
Secondary activities spun three consecutive quarters of acceleration after registering 0.2 and 0.4% that they reached in the previous two quarters, as a result of the advance observed in exports.
The economist for Latin America at the Pantheon Macroeconomics consultancy, Andrés Abadía, explained that the data released by the Inegi are the result of the reopening of activities and relatively solid remittances from abroad.
Agricultural production plummeted
The detailed information of the opportune estimation of the GDP shows that the activities of the primary sector suffered a drop of 1.9% in the first quarter.
Agricultural production represents around 4% of total GDP, dwarfing gains in the second half, Abadía reported.
The performance of the sector occurs in the context of food inflation that has remained under pressure. In March, agricultural products had an annual rise of 17.05% in their prices.
With downside risks
Mexico would grow up to 2% in 2022, they anticipate
Nor this year will it be able to recover the level of growth it had before the pandemic: Banco Base
Private sector economists anticipate that the GDP will register a growth between 1.5 and 2% and warned of downward risks driven by the external and internal political situation.
After knowing the timely estimate of the Gross Domestic Product (GDP) in the first quarter, the director of economic analysis of Banco Base, Gabriela Siller, projected that the GDP will achieve a growth of 1.5% in all of 2022. This is the lowest expectation for economic activity and coincides with that forecast by Bank of America Securities.
Close to them is the projection of the business consultancy Moody’s Analytics, which is at 1.8% per year, with significant downside risks.
Economists from Grupo Financiero Banorte; of the investment fund Vanguard Latin America and the Pantheon Macroeconomics consultancy estimate that the Mexican economy will achieve a growth of 2% this year, and they see downward risks.
Siller stated, at a press conference, that even if Mexico manages to maintain growth similar to that of the first quarter of the year and manages to save the impact of the drop in purchasing power, it will not recover the level it had in 2019.
He specified that when comparing the GDP of the first quarter of 2022 with that of 2019, there is a lag of 3 percent. Until the first quarter, Mexico’s foreign trade figures show a positive performance that could be affected by the deterioration in the dynamics of foreign demand led by the United States, he warned.
In fact, the strategist highlighted that of the 46 largest economies in the world, Mexico ranks 45th in GDP recovery level, only above Thailand. This means that the other 44 economies are in a better position than Mexico in terms of economic recovery.
The senior economist for Latin America at Pantheon Macroeconomics, Andrés Abadía, highlighted that the future is challenging for Mexico.
To begin with, inflation will continue to impact purchasing power and income will have additional pressure given the probable decrease in remittances linked to the performance of the real estate sector in the United States, he commented.