Mexico GDP Growth Revised Up to 0.7% In Q1


The Mexican economy expanded 0.7 percent on quarter in the first three months of 2017, higher than 0.6 percent in the preliminary estimate and the same as in the previous period. Agriculture and industry expanded more than expected, final figures showed. Yet, the Mexican economy’s fundamentals look stronger than anticipated after an initial shock triggered by the US presidential election sent investment and consumer sentiment to record-low levels in January, worsening the growth outlook. However, investment has been hurt by uncertainty surrounding US and Mexico relations and industrial output remains subdued.

Services rose 1 percent, higher than 0.9 percent in the previous period and in line with earlier estimates. The agricultural sector expanded 1.1 percent, above 0.6 percent in the last three months of 2016 and better than preliminary figures of 0.7. Industrial output edged up a meager 0.1 percent for the third quarter, although better than a flat reading initially estimated. 

As President Trump’s rhetoric on NAFTA and proteccionism moderates, the Mexican peso recovered to pre-US election levels and exports, car production and private spending continue to support growth. However, private and public investment remain subdued amid uncertainty over bilateral relationship between Mexico and the United States. Yet, industrial production remains weak, with the manufacturing PMI falling to 50.7 from 51.5 in April. Political risk between US and Mexico is far from gone as President Trump already informed the US Congress he wants to start renegotiating the NAFTA deal as soon as in August. The United States are Mexico's main export partner, accounting for more than 80 percent of total exports and around half of cars exported. 

On a yearly basis, the GDP advanced 2.8 percent, above 2.7 percent in the preliminary reading. 

Joana Taborda | joana.taborda@tradingeconomics.com
5/22/2017 2:07:40 PM