Mexican economy likely expanding at a pace close to trend

In January, Mexico’s manufacturing sector recorded the slowest growth pace since May 2015. It appears to be heading towards an ordinary year unless demand growth in the US improves. Still, industrial production in January grew at the fastest pace in four months due to positive growth in construction sector and the slower contraction of the mining sector. Meanwhile, services growth scenario has not altered for now.

“We expect the economy to have continued to grow at a pace (2.5% yoy) close to its trend”, says Societe Generale.

The Mexican economy is expected to have expanded at the fastest pace of 0.3% m/m since September 15, according to Societe Generale, and is in line with the bank’s Q1 growth projection of 2.3% q/q (annualized rate).

“Overall, we expect the economy to grow by a slightly lower pace of 2.4% in 2016 than the 2.6% growth posted in 2015”, says Societe Generale.

However, the bank’s growth forecasts faces certain risks on the downside as the demand side detail for Q4 implies a persistent slowdown in export growth and investment.