Mexico Economy Grew 2.6% in First Quarter on Consumer Demandby and
Finance Ministry cut 2016 growth forecast to 2.2%-3.2% range
Statistics agency publishes final data for first quarter
Mexico’s economy expanded 2.6 percent in the first quarter from the year earlier, in line with a preliminary calculation last month, on a rebound in consumer demand. Still, the Finance Ministry cut its growth forecast for the year as the external environment deteriorated.
Gross domestic product rose 0.8 percent from the previous quarter, according to the final figures released by the national statistics institute Friday. The preliminary report had given annual growth of 2.7 percent and quarterly growth of 0.8 percent.
Shoppers have benefited from a slowdown in annual inflation in each of the past two months, while a weaker peso has boosted remittances. Consumption has been the key driver of Mexico’s better-than-expected expansion, the central bank board said in the minutes to its May 5 rate decision. In April, analysts had forecast growth of only 2.4 percent for the first quarter.
Despite beating estimates, the Finance Ministry cut its growth forecast range for this year to 2.2 percent to 3.2 percent from 2.6 percent to 3.6 percent Friday. While there are positives in the Mexican economy, the forecast cut reflects a tough external environment and lower growth in the U.S., Deputy Finance Minister Fernando Aportela said.
Growth was led by the services sector, which expanded 3.7 percent from a year earlier, while industrial activity increased 0.4 percent, according to the statistics institute. The overall pace of expansion strengthened from a revised 2.4 percent in the fourth quarter.
The final GDP figure followed an industrial production report for March that was weaker than analysts expected. The preliminary data had showed industrial activity increasing 0.7 percent in the first quarter.
The peso strengthened 0.3 percent to 18.367 per U.S. dollar at 8:13 a.m. in Mexico City. The currency has weakened 6.8 percent this month through Thursday, the worst performer after the South African Rand among 16 major currencies tracked by Bloomberg.
In an interview last month, central bank Governor Agustin Carstens said the economy may get even better as factors that have held back the expansion, such as weak exports, begin supporting growth.