Mexico’s GDP Grew 1.9% in the First Quarter; Marks Six Consecutive datapoints of Deceleration

The industrial sector, part of the secondary activity category, entered a “technical recession,” according to experts at Pantheon Macroeconomics, registering a second consecutive quarter of contraction.

The Gross Domestic Product (GDP) for the first quarter of the year showed a 1.93% annual growth in real terms, with seasonally adjusted figures, according to the National Institute of Statistics and Geography (INEGI).

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The final annual GDP figure marked six consecutive quarters of deceleration since the peak in the third quarter of 2022, when it expanded by 4.64% annually. This was the least dynamic in ten quarters, since the fourth quarter of 2021. The information released by Inegi surprised private sector specialists consulted by the Bank of Mexico (Banxico), who had projected an annual growth of 2.30%, and it was close to the 2% projected by Inegi in its preliminary estimate.

Petya Koeva, Deputy Director of Economic Research at the International Monetary Fund (IMF), warned in April that the context of rising minimum wages, remittance flows, and the availability of cash subsidies were fueling domestic demand, particularly benefiting the services sector.

Following in annual performance is the secondary activities sector, which includes industry and manufacturing, with a 1.5% increase compared to the same period in 2023. Banco Base’s Gabriela Siller and Monex’s Janneth Quiroz noted that the strong peso increased the cost of imported inputs used in industrial production, which reduced the sector’s dynamism.

In the referenced quarter, the Mexican peso appreciated by 3% against the dollar, impacting the competitiveness of Mexican exports.

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Ignacio Teson
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
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