Mexico | GDP slowed down in 4Q23 with industry stagnation

Economic activity grew 0.1% QoQ in 4Q23, with null variation in industry (0.0% QoQ), and modest growth in the tertiary sector (0.1% QoQ)

Key points

Key points:
The lack of dynamism of the industry reflects the slowdown in external demand and the deceleration of public construction; in December, US manufacturing production fell or stagnated in all durable goods subsectors except automobiles and furniture, with accumulated household savings gradually depleting.
In the tertiary sector, the lower growth linked to a slow dynamism of wholesale trade and related services (transport, real estate, financial), considering its degree of connection with the industrial sector in the supply chain; that deceleration offset by the moderate growth of retail trade supported by gains in labor income.
Going forward, we anticipate resilience in retail sales given the gains in real wages and real wage bill that have materialized since mid-2022, with a moderate outlook for the industry given the slowdown in US demand and the reduction in the public spending directed at investment.
The outlook for the manufacturing sector improves in the medium term due to the potential relocation of global value chains (nearshoring), whose effect has already being reflected in the machinery and equipment segment.