Moderate Growth in Third Quarter for Mexico’s Economy
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Recent statistics suggest that the economic recovery in Mexico continued at a moderate pace throughout the third quarter. Industry, agriculture and service, all contributed. In the July to September period, the gross domestic product or GDP increased about 2.2%.
This is a significant boost in comparison with the third quarter of 2013, and 0.5% higher than second quarter numbers in seasonally adjusted terms, according to the National Institute for Statistics.
Recent statistics suggest that the economic recovery in Mexico continued at a moderate pace throughout the third quarter. Industry, agriculture and service, all contributed. In the July to September period, the gross domestic product or GDP increased about 2.2%.
This is a significant boost in comparison with the third quarter of 2013, and 0.5% higher than second quarter numbers in seasonally adjusted terms, according to the National Institute for Statistics.
Third quarter growth was mildly below the median estimate of 2.3% reported by eleven economists. Economic expansion was 1.9% for the first nine months of the year. The 0.5% growth in the second quarter translates to annualized rate of 2%, and marks a small slowdown in comparison to the 0.9% witnessed in the previous period.
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The Growth so Far
Manufacturing efforts, especially within the automotive industry, have been driving growth significantly this year. Construction has also begun to recover from its slump during 2013, increasing 4% in the third quarter, in comparison to the year before. However, lower gas and oil production offset the gains. Overall, agricultural production rose by 7.3% whereas industrial output and service increased by 2%.
Mexico is going to have to rebuild parts of Cabo San Lucas as well. A huge storm hit the tip of Baja California in the late summer of 2014 and devastated this incredible tourist town. Mexico knows it must help this gorgeous hotspot.
The Bank of Mexico lowered its growth estimate for 2014 from the previous forecast of between 2% and 2.8% to between 2% and 2.5%. What’s more, the finance ministry reduced its forecast for the full year from the previous estimate of 2.7% to between 2.1% and 2.6%. According to the deputy finance minister for Mexico, Fernando Aportela; the government expects poor crude oil production to take around 0.4% off growth this year.
Nothing to Write Home About
Although moderate growth continues, the economy will register a second year of below-estimate growth. Economists suggest that the poor recovery of the global economy is holding Mexico back, as well as struggling investment and domestic consumption numbers. The central bank suggests that legal overhauls made in telecommunication and energy could begin to have a positive impact on growth during 2016.
Signs for the Future
Economists have announced that the results so far seem to bode well for the coming quarters, although concerns regarding security issues in Mexico and a sharp drop in oil prices could create roadblocks. The Mexican economy still has a massive amount of room for improvement, but security risks pose risks to further economic activity. Earlier this year, students died while riding on a school bus, for example.
According to the emerging market economist, Davis Rees, with demand in the United States set to improve, the Mexican economy could gain momentum, allowing it to develop as a standout performer in 2015 and 2016.
