The Mexican economy registered a growth of 1.08% in the third quarter compared to the performance of the previous quarter, with figures adjusted for seasonality, according to information from the National Institute of Statistics and Geography (Inegi).
With this record, the Gross Domestic Product (GDP) It achieved a third consecutive quarter of progress and was the most dynamic performance of the last 10 quarters.
Despite the quarterly performance, Economists consulted clarified that it cannot be read as an underlying strength of the economy.
“Economic activity faces obstacles derived from the political uncertainty after the elections, the negative impact of fiscal consolidation, the weakness of business confidence and the moderation of external demand”, clarified the Goldman Sachs economist for Latin America, Alberto Ramos.
The information released by Inegi shows that the GDP growth in the period from July to September It exceeded the preliminary estimate of the same institute, which was 1% and exceeded market expectations that anticipated an advance of 0.8%.
According to the information disclosed, the activity of the economy in the third quarter was driven by the performance of the tertiary sector, that integrate services and commerce that reached a variation of 2.1% annually and 1.1% compared to the previous quarter.
The activities of this segment, represent 64% of the GDP, Therefore, its performance is decisive for growth.
Although the progress of the primaries was more dynamic, which encompass fishing, agriculture and livestock, barely represent 3.4% of the total GDP.
In fact, the activities of the sector They recorded a growth of 4.9% compared to the previous quarter and 3.7% in the annual comparison.
According to the information, activities in the secondary sector showed a growth of 0.9% compared to the previous quarter. This performance in the annual record incorporates an advance of 0.4%. And they represent 34.9% of GDP.
In services, the most dynamic category was professional, scientific and technical services, of 16.6% and in contrast the slowdown in the area of services and support for businesses and waste management stands out, which fell 5.5%.
Construction slows down
Economists from the Mexican Securities fund operator (Valmex) They highlighted that within the industrial sector, the rise in the construction sector stands out, which in the nine months of the year registered a growth of 6.3% accumulated.
Despite the progress, shows a pronounced deceleration compared to the double-digit expansion recorded in the previous two years.
As explained by BNP Paribas economist for Mexico, Pamela Díaz, construction has operated as a counterweight to the weakening of the industrial sector and that could also underpin activity in the expected slowdown in foreign demand from the United States.
Valmex experts highlighted the contraction of mining in the quarter, of 3.9%.
Members of the Banxico Governing Board expressed, since June, in the monetary meeting as described in the minutes, that weakness is observed in the railway works, petrochemical, mining and electricity sectors. Overall, they observed sluggishness in manufacturing and construction that expanded at lower rates than those recorded in the first quarter.
“At the beginning of the second quarter, industrial activity continued to show sluggishness, “Manufacturing remained weak while construction showed low dynamism,” they stood out.
Weakness and uncertainty
According to economists from Citibanamex and Valmex, Third-quarter performance is not strong enough to prompt an adjustment to its GDP forecast for the year as a whole. So they left their forecasts at 2.5 and 1.6%, respectively.
They anticipate weakening for next year and risks of deceleration due to uncertainty due to internal policies and the change of powers in the United States along with the changes that the review of the T-MEC may leave.
The diagnosis of debilitation It is shared by Banco de México, as explained by the deputy governor, Omar Mejía Castelazo.
Before economics students from the Universidad Panamericana, He stressed that the slack conditions in the economy will continue even in the first quarters of next year, which will also have a relevant role in inflationary dynamics.
The central banker emphasized that consumption is expanding at a slower rate while the investment shows a lateral behavior after the significant recovery it previously registered.
He explained that in the labor market they find the unemployment rate at historic lows; however, The pace of growth in formal employment has moderated in most sectors of the country and in the case of salaries, high growth rates are still seen that no longer have increasing readings.
“This tells us that we have a strong resilient market that is beginning to show signs of moderation. In this environment of greater weakness, it is estimated that the Product gap is practically zero. If we see other slack indicators, we have less activity in main components and we anticipate that this gap will begin to close.”
According to the director for Mexico at the World Bank, Mark Thomas, The GDP gap takes into account the differential between potential growth and observed growth.
Consumption appears practically closed. Although we see some uncertainty, What we believe is that the balance of risks going forward is biased rather to the downside. although relocation is on the rise and trade policies have an adverse effect.
Yes we see growth at the end of this year and next, they stressed.
