Mexico's economy grows 1%, less than expected for the start of the year

Mexico's economy continues to show positive signs of growth, albeit slower than expected. The Gross Domestic Product (GDP) had a growth of 1% in the first quarter of 2023, according to revised data from the National Institute of Statistics and Geography (Inegi). The figure was down from 1.1% since the timely estimate revealed in April, although it is the best performance of GDP since the second quarter of last year, according to seasonally adjusted figures.

The growth of the economy has shown six consecutive quarters with growth, something that did not happen since the first quarter of 2016. "The growth figure is still positive and implies an expansion of 1.8% compared to the fourth quarter of 2019, prior to the beginning of the pandemic," says Gabriela Siller, director of economic analysis at Grupo Base.

Within the index, primary activities (agriculture and livestock) contracted 2.8% during the first part of 2023, but showed an annual growth of 2.9%, due to the accumulated growth in the previous three quarters. Meanwhile, secondary activities (industry and manufacturing) grew 0.6% in the quarter and 2.4% at an annual rate. In the end, tertiary activities (services and trade sector) grew 1.5% in the first quarter and 4.2% at an annual rate, being the main driver of GDP growth during the first quarter, this sector being the one that has shown the best performance since 2015, not counting 2020, when activities were suspended due to the health emergency due to covid-19.

"The expectation remains that in 2023 Mexico's GDP will grow between 1.7% and 2%, although there are still risks to growth due to the high probability of recession in the United States, which may affect Mexico's GDP through remittances and exports," explains Siller.

In early April, the International Monetary Fund announced that it expects the Mexican economy to grow 1.8% in 2023, following growth of 3.1% in 2022. The streak of increases in GDP has been accompanied by a fall in inflation in the country. In April, the annual inflation rate stood at 6%, the lowest figure since September 2021. During the first 15 days of this month, the products that lowered their price the most were electricity, with a decrease of 21.22%, lemon with a decline of 16.63% and chicken, with a decrease of 1.51%.

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