Mexico | The slowdown of the economy extends; the industry fell (-)0.4% QoQ in 1Q24

Economic activity grew 0.2% QoQ in 1Q24, with a drop in the industrial sector (-0.4%, QoQ), and resilience of the tertiary sector (0.7%, QoQ); at an annual rate, the estimate of GDP growth indicates a variation of 2.0% for 1Q24, 1.5% for secondary activities, and 2.5% for tertiary activities.

Key points

• Key points:
• The decline in the industry during the first quarter of this year adds to the contraction that the sector experienced in 4Q23 (-0.1% QoQ), confirming the slowdown in manufacturing and construction, given the lower demand for durable goods in the US and the decrease in public spending on infrastructure for this year.
• With respect to the tertiary sector, although the retail segment has remained relatively resilient driven by the accumulated increase in real wages and the real wage bill, the wholesale segment surprised upwards during February by registering a monthly growth of 4.0% , the highest figure since February 2022.
• We estimate a gradual slowdown of the tertiary sector towards the second half of the year, as the lower growth of the industry is transferred to other sectors of the economy, with lower public spending in the first months of the next federal government administration.
• Considering the first estimate of GDP growth published by INEGI today, we print a downward bias on our growth estimate for 2024 (BBVA 2.5%), with lower investment dynamism, and relative resilience of private consumption.

Authors

Geographies

Topics

Tags