AMLO, we have a problem: Mexico’s economy confirms slowdown and grows 1% in 2Q

Mexico’s Gross Domestic Product (GDP) confirmed its deceleration trajectory, as it grew by 1 percent in the second quarter, below the timely estimate of 1.1 percent published by the National Institute of Statistics and Geography (Inegi) in July.

The 1 percent annual growth rate is the lowest since the 1.6 percent annual contraction in the first quarter of 2021, according to seasonally adjusted figures.

In fact, Inegi made a ‘wave’ of revisions to the three major sectors of the Mexican economy.

The tertiary sector, which includes trade and services and is the one with the greatest weight in GDP, had an annual growth of 1.5 percent in the second quarter, below the 1.7 percent of the timely estimate.

Meanwhile, the secondary sector, with construction and manufacturing as its benchmarks, showed an annual advance of 0.4 percent below the 0.5 percent expected.

The slowdown in the services and industrial sectors was the most moderate since the first quarter of 2021, which at that time showed a notable slowdown due to the COVID-19 crisis.

The primary sector, which includes the agricultural sector, had a 2.5 percent annual drop in the second quarter, deeper than the 2.2 percent contraction previously projected by Inegi.

In its quarterly comparison, the Institute left the GDP growth reading unchanged at 0.2 percent. However, it cut that of the tertiary sectors to 0.1 percent, from 0.3 percent; the GDP of the secondary sectors remained at a quarterly advance of 0.3 percent, while the fall in the primary sectors was not as pronounced and was finally 0.2 percent and not 1.7 percent.

Mexico’s economy has a weak first half

In the January-June balance, Mexico’s GDP grew 1.4 percent annually, its weakest reading for the same period since the 2020 collapse of 11.3 percent annually amid the COVID-19 pandemic.

By sector, services advanced 1.9 percent annually and industry grew 1 percent annually, well below the 3.7 and 3.3 percent annually reported in the first half, but in 2023.

The GDP of primary activities had a fall of 2.3 percent annually in the first half, reflecting the complications it had in those months, and which meant its steepest fall for the same period since 2011.

With this, the Government of Andrés Manuel López Obrador will fail to fulfill the promise of reactivating Mexico’s economy in his six-year term and bringing it to levels above 4 percent.

In 2019, the federal government said it expected an average six-year growth of 4 percent and an estimate of 6 percent for 2024, according to the 2019-2024 National Development Plan.

Spurce: elfinanciero