Mexican economy likely slowed down to 2.4% y/y in Q4

Mexico's economy is projected to have slowed down in Q4 to 2.4% y/y, as compared with the 2.6% y/y growth registered in Q3. The economy is expected to have expanded by 2.5% in 2015, indicating a moderate rebound from 2.3% growth in 2014.

"Despite the recent downgrade to our 2016 growth forecast, we believe the economy should see some growth acceleration this year assuming export growth to the US remains on course", says Societe Generale.

The service sector in general has positively contributed in recent quarters and assisted in the industrial production to rebound from recent slowdown. The Mexican economy is likely to expand above-trend in 2017.

Meanwhile, the demand-side economy, which is led by consumption growth, is unexpectedly performing much better than the headline growth numbers. The economy is projected to expand 2.9% in 2016. However, the near-term outlook mainly depends on exports that are being impacted by decline in oil prices. The Mexican economy might further slowdown if the US economic growth slows. Nevertheless, the medium-term economic outlook continues to be positive.