off-the-wire

UPDATE 1-Mexico economic growth regains steam with 1.1% expansion in Q1

Kitco Media
By Reuters
Published:
Updated:
Reuters
(Adds details, context) MEXICO CITY, April 28 (Reuters) - Mexico's economy expanded for the sixth consecutive quarter in early 2023, a preliminary estimate from national statistics agency INEGI showed on Friday, with growth also regaining steam after a slowdown in the previous three-month period despite tight monetary conditions. Latin America's second-largest economy posted a 1.1% gross domestic product (GDP) growth in the first quarter compared to the previous three months, INEGI said, beating market expectations and ahead of the 0.5% increase seen in late 2022. Economists polled by Reuters had estimated a 0.8% expansion in the period. "The figure puts an upward bias to our GDP growth forecast for this year of 1.8%," economists at Itau BBA said in a note to clients, though adding activity is expected to soften in the last three quarters given a slowdown in the U.S. economy and a tight monetary policy stance.


The quarterly growth, INEGI said, was driven by a 1.5% jump in the tertiary or service sector and a 0.7% increase in secondary activities, which comprise manufacturing.


Those offset a 3.1% drop in primary activities such as farming, forestry, fishing and mining.


Compared with the same quarter a year earlier, the Mexican economy also grew 3.9%, the statistics agency said. Economists' forecast for the yearly data stood at 3.3%, according to a Reuters poll. "Overall, this is a solid report showing solid growth on the back of supportive remittances, rising exports, and improving labor market conditions," Pantheon Macroeconomics' chief Latin America economist Andres Abadia said.


"(But) looking ahead, the outlook is mixed for the second half of the year, at least," he added, noting that stuttering manufacturing activity and softening remittances from the United States were big threats despite falling inflation levels.


Final GDP figures for the first quarter are scheduled to be released on May 26.

(Reporting by Gabriel Araujo in Sao Paulo; additional reporting by Noe Torres; Editing by Steven Grattan)

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