Make Kitco Your Homepage

Mexican economy grew for sixth consecutive quarter in Q1

Kitco News

May 26 (Reuters) - Mexico's economy grew for the sixth quarter in a row in the first quarter, data from Latin America's second-largest economy showed on Friday, with growth in line with market expectations.

Gross domestic product (GDP) increased 1.0% in the period from the previous three months, statistics agency INEGI said, matching forecasts from economists in a Reuters poll.

The figure, however, came in slightly below preliminary estimates disclosed by INEGI a month ago, when the statistics agency said GDP had likely increased 1.1% in the period on a sequential basis.

Economists had already dubbed the preliminary first quarter data as "solid," although noted a slowdown in the U.S. economy and tight monetary policy would probably soften Mexico's performance in the coming quarters.

"Overall, these numbers confirm a decent start to the year," Pantheon Macroeconomics' chief economist for Latin America, Andres Abadia, said about Friday's figures. "But sequential data is confirming a gradual deterioration in recent months."

Additional indicators released by INEGI showed that economic activity in the country shrank 0.3% in March from the previous month.

Abadia said the "good news" was that fading growth momentum and falling inflation would make it easier for the central bank to adopt a dovish tone soon after pausing a nearly two-year rate-hike cycle earlier this month.

The quarterly GDP growth, according to INEGI, was driven by a 1.5% jump in the tertiary or service sector and a 0.6% increase in secondary activities, which comprise manufacturing.

Primary activities such as farming, forestry, fishing and mining, nonetheless, shrunk by 2.8%.

In annual terms, the agency added, the economy expanded 3.7% in the first three months of 2023 compared to a year earlier. That was slightly below the 3.9% growth expected by the market and projected by last month's preliminary data.

Reporting by Gabriel Araujo; editing by Steven Grattan, Jason Neely and Conor Humphries
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.