Mexico’s economy rebounded in the first quarter, expanding more than 4 percent from a year earlier after contracting 2.3 percent in the last three months of 2009, the Finance Ministry’s chief economist said.
Consumer demand is reviving even as the export-driven manufacturing industry bounces back faster than domestic sectors like services, Miguel Messmacher said today in a telephone interview from Mexico City. The Finance Ministry will give an estimate for first-quarter growth April 30, and the statistics agency will report the official figure May 20.
“The economic recovery is stronger than we anticipated,” Messmacher said. “The fundamentals in Mexico have surprised to the upside.”
Gross domestic product will grow as much as 5 percent this year, according to the central bank, after Latin America’s second-largest economy shrank 6.5 percent last year, its worst slump since 1932. The economy grew 3.4 percent in February from a year earlier, the national statistics agency reported today.
Gross domestic product showed a “rather sluggish performance” in the first two months of the year given that it only grew 0.4 percent in February from the previous month and shrank by 1.1 percent in January from December, Barclays Capital said in a report today. Barclays had forecast the economy would grow 4.6 percent in February from a year earlier.
Messmacher also said that core inflation, which excludes some food and energy prices, will continue a “declining trend.” Overall inflation tends to follow core prices, he added. Core inflation slowed to an annual pace of 4.4 percent in March, a two-year low.
While annual inflation reached a seven-month high in March, the central bank may use a quarterly report tomorrow to say the increase is being driven by one-time effects from taxes and gasoline costs, said Eduardo Suarez, an emerging-market strategist at RBC Capital Markets in Toronto.
Banco de Mexico has kept the benchmark interest rate at 4.5 percent since July and Governor Agustin Carstens said March 21 there’s no need to boost rates “at this stage.”