Mexico's GDP outlook improves at margin due to strong domestic drivers

Mexico's GDP proxy (IGAE index) increased 0.5% m/m sa in August, better than expected, as a result of a very strong expansion in the primary and tertiary (services) sector.

"After this report, Mexico's Q3 GDP is forecast to 0.7% q/q sa, from 0.4% q/q sa previously. The economy will likely grow 2.3% y/y this year (instead of 2.2%) as it is still expected that there will be a deceleration in Q4. Also, the 2016 annual forecast has increased to 2.5% y/y from 2.4% before", says Barclays.

Even though the domestic drivers of growth remain strong, external headwinds should dominate in the coming months. September data are pointing to a deceleration in that month, and the external environment might continue to contaminate the economy during Q4.