The path of the #IOAE in February-March 2022, together with the data observed from the #IGAE in January, would point to a growth in the #GDP of #Mexico around 1.6%, both in quarterly and annual terms”
@SantaellaJulio
The Mexican economy would turn the narrative around and surprise in the first quarter of the year, presenting better results than expected due to the fear caused by the wave of Covid-19 caused by the Omicron variant.
According to the Timely Indicator of Economic Activity (IOAE), the Mexican economy would have expanded at an annual rate of 0.4% in March, while compared to February, the expansion would be 0.8 percent.
In this way, and considering the February estimate of annual growth of 2.8 and 0.2 per month, the Gross Domestic Product (GDP) would present a quarterly rate of 1.6 percent.
“If it materializes, it would diametrically transform the narrative that was held just a few months ago about the first quarter of the year, since the performance would have been exceptionally strong (…) leaving aside the results distorted by the arithmetic effects in the third and fourth quarters of the year. 2020, it would be the largest, not only in the current administration, but in the last 10 years,” said Marcos Daniel Arias, an analyst at Monex.
The GDP boost would come from a lesser impact of the Ómicron variant, which, although it accelerated infections in the country, did not cause a new confinement or strong restrictive measures, in addition to presenting a strength in external demand, Banorte strategists pointed out.
They added that domestic conditions were relatively positive, which was recorded in a better performance of the service sector, one of the hardest hit during the first year of the pandemic; however, they noted that price pressures and supply chain disruptions may well have limited the pace of expansion.
Since the end of 2021, high levels of inflation and disruptions in the chains have put central banks in check, which have had to opt for a more restrictive monetary policy.
The government of Andrés Manuel López Obrador expects the Mexican economy to grow around 3.4% this year, something that analysts and institutions have considered “optimistic”, given the conditions that have arisen in recent months such as high levels of inflation and Russia’s invasion of Ukraine.
Meanwhile, just this Tuesday the International Monetary Fund (IMF) lowered its growth outlook for Mexico from 2.8 to 2.0%, while other institutions such as the World Bank cut it to 2.1% and the rating agency Moody’s to 1.1 percent.
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Inside the report it was observed that at an annual rate, the economy would have slowed down from 2.8% in February to 0.4% annually in the third month of the year. This would be the lowest rate of expansion since October of last year, when the same data was recorded.
However, the final result could oscillate between a contraction of 1.4% and an annual growth of 2.2%, according to the lower and upper estimates made by the Inegi.
In the detail, it was observed that the annual result for March would be due to a contraction in the services sector, of 0.3%, while the secondary sector would have an expansion of 3.1 percent.
In the monthly comparison, the economy would have accelerated from 0.2 to 0.8% in March. With these data, it would register five consecutive months of expansions, that is, since November 2021.
“The figures for March stand out for showing a sustained change in trend, since there are already five months of consecutive monthly growth and with variations higher than the average for 2021. In said period, the accumulated growth has been 2.9%, which, coincidentally, is the same as the economy advanced between November 2020 and March 2021, before the impact of the different variants of Covid-19 dissipated most of said gains, ”said Marcos Daniel Arias.
The breakdown shows that the industrial sector would be the one that would support monthly growth, with a rate of 1.0% compared to the previous month, while tertiary activities would have an expansion of 0.7 percent.
“The industry would advance 1.0% per month, with a more favorable base and evidence of dynamism in manufacturing. Services would extend their advance by 0.7%, supported by internal demand that continued to improve, proof of this are the results of the IMEF indicators and ANTAD sales”, Banorte highlighted.