Mexico slower growth path pushes back rate hike expectations

Mexico's economy will face headwinds in the second half of the year. The external environment remains quite problematic, with global growth facing downside risks. The GDP report released this week was positive, but with caveats. 

In particular, GDP expanded by 0.5% q/q sa in Q2 15, slightly better than market expectations but above consensus forecast of 0.9% q/q sa. This was the result of a strong performance in services (0.9%), offset by a flat print in industrial activities (0.0%) and a contraction in primary production (-1.6%). In annual terms, GDP increased 2.2% in Q2 for annual growth of 2.4% during H1 15 as a whole. Due to the slower growth path of the Mexican economy, the rate hike expectations is pushed back, says Barclays in a report on Friday.