According to preliminary estimates from Mexico’s national statistics agency INEGI, the country’s economy experienced better-than-expected growth in the first quarter of the year compared to the previous three months. Despite predictions of a 0.0% quarter-on-quarter expansion, the economy grew by 0.2%. This growth was attributed to a downturn in the primary sector, which was partially offset by growth in services.
On a yearly basis, Mexico’s economy expanded by 1.6%, which was a slowdown from the 2.5% growth seen in the previous quarter and below the expected growth of 2.1%. The slowdown was confirmed by Chief Latin America Economist at Pantheon Macroeconomics, Andres Abadia, who noted that various challenges influenced this deceleration, including tighter financial conditions, difficult external conditions, and increased infrastructure spending.
Despite facing these challenges, Mexico’s economy has now expanded for ten consecutive quarters. While this is good news for investors and analysts alike, Abadia believes that the growth momentum appears sluggish compared to recent trends. He suggests that external factors and reduced financial conditions have contributed to this weaker performance in Q1.
Overall, while Mexico’s economy is growing at a slower rate than expected, it remains resilient and continues to expand despite several obstacles. As such, investors may want to keep an eye on developments in Q2 and beyond to see if Mexico can regain some of its lost momentum or if external pressures continue to weigh heavily on its economic performance.