Mexico | Modest GDP growth in 2Q24; gloomy outlook for the rest of the year

Summary

Economic activity showed slow dynamism in 2Q24, with a quarterly variation of 0.2%; in accumulated terms GDP grew 1.5% YoY in 1H24, compared to the same period of the previous year (industry 1.0%, tertiary sector 2.0%).

Key points

• Key points:
• The sluggishness of economic activity points to a gloomy outlook for 2H24, with an extended slowdown in the manufacturing sector (given the deceleration in external demand for durable goods) and the loss of momentum in the tertiary sector (with a gradual slowdown in the real wage bill).
• Regarding the industrial sector, although the construction sector has managed to maintain momentum so far this year (5.3% above its Dec-23 level), it has not been enough to offset the contraction in manufacturing (0.4% below its Dec-23 level).
• With respect to the tertiary sector, although the retail segment had remained resilient at the beginning of the year (due to accumulated gains in real wages and formal employment), the latest data from the IMSS suggest less dynamism in the real wage bill in recent months, as the slow growth of the industry materializes in lower job creation in that segment.
• The timely GDP estimate that INEGI published today corroborates our downward bias on the growth forecast for 2024, which could be closer to the growth that production has shown in the first half of the year.

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