Driven by services and industry, GDP grew 0.2% in the 2nd quarter

Mexico City. The growth of the gross domestic product (GDP) confirmed the low dynamism of the Mexican economy, with a growth of 0.2 percent in the second quarter of 2024, which brought annual growth to 1.1 percent in real terms, with figures adjusted for seasonality, revealed the National Institute of Statistics and Geography (Inegi).

According to the timely estimate of the quarterly gross domestic product (Eopibt), which offers a short-term view of the evolution of the country’s economic activities, services and industry kept the Mexican economy in positive territory during the April-June period, but below the 0.4 percent quarterly estimated by the consensus of analysts and the 0.3 percent of the first quarter.

In its annual behavior and with seasonally adjusted series, economic activity registered its lowest growth rate since the first quarter of 2021, when it was 1.64 percent. In addition, the 1.1 percent growth was lower than the 1.9 percent annual growth of the first quarter of the year.

The Mexican economy has accumulated 11 consecutive quarters of growth. Inegi estimated that it grew by an average of 1.5 percent annually in the first six months of 2024, an election year.

On a quarterly basis, the GDP of secondary (industry) and tertiary (services) activities grew by 0.3 percent.

The primary sector (agriculture and livestock) decreased by 1.7 percent in the second quarter of 2024.

Meanwhile, services increased by 1.7 percent annually in the second quarter of this year and industry by 0.5 percent; primary activities decreased by 2.2 percent.

At the end of the first half of 2024, services grew by 2 percent annually, while the secondary sector grew by 1 percent. Agricultural and livestock activities contracted by 0.9 percent in the reference period.

GDP, whose final data will be published on August 22, slowed compared to the start of 2024. This reflected a contraction in the primary sector due to adverse weather factors that have had a negative impact; and there is less vigor in services, after growing 0.6 percent in the first quarter. On the other hand, industry regained some strength, as it was the first quarterly increase in five readings.said Alejandro Saldaña, chief economist at Ve por Más.

Moderation in progress

According to original figures, without performing a statistical process, Mexico’s GDP grew 2.2 percent annually in the second quarter of 2022, reflecting distortions associated with Holy Week, since in the previous quarter the increase was 1.6 percent.

Productive activity was driven by a 2.7 percent increase in services and a 1.9 percent increase in industry. The agricultural sector fell by 2.7 percent. Thus, in the first half of 2024, the Mexican economy reported an increase of 1.9 percent compared to the same period last year.

The political cycle was present in the middle of the year in its stimulus phase, both for consumption and investment, although both began to fade in June. This sends warning signals for the second half of the year, since the economy will be affected by the opposite phase. The data for the second quarter was less strong than expected, because the moderation underway will deepen in the rest of the year, before the end of the six-year term and the political transition, as has occurred repeatedly in the last 30 years.said Alfredo Coutiño, director of Moody’s Analytics.

The specialist commented that the data is not enough to support growth of more than 1.5 percent for the whole of 2024, far from the estimate of the fiscal and monetary authorities. The bias is even downwards.

Eduardo Suárez, vice president of economic analysis for Latin America at Scotiabank, said that GDP averaged 1.9 percent growth in the first half of the year, at a slower sequential pace than expected, with signs of further moderation in the following quarter, so growth expectations could be revised downwards again.