Economy To Regain Steam In The Coming Months
BMI View: We are downgrading our 2014 Mexican real GDP growth forecast from 3.5% to 3.3% amid signs that the economic recovery that began in mid-2013 lost momentum in Q413 and into Q114. That said, we still expect a significant uptick in economic activity compared to 2013, when real GDP growth came in at 1.1%, as the manufacturing sector regains steam and the construction sector continues its gradual recovery.
Real GDP growth in Mexico came in at 1.1% in 2013, below our 1.5% estimate, prompting us to downgrade our 2014 forecast to 3.3% from 3.5%. The main dynamics that drove slower than-expected growth in 2013 were a moderation in the pace of expansion of the manufacturing sector in Q413 and ongoing contractions in construction sector output. Both factors weighed down on Q413 real GDP growth, which came in at 0.7% year-on-year (y-o-y), compared to 1.4% y-o-y in Q313. High frequency economic activity data for early-Q114 also points to a weak beginning of the year, particularly regarding the manufacturing and consumer sectors. However, we expect Mexico's economic recovery to regain traction in the coming months as US external demand strengthens and household spending improves. In 2015, we forecast real GDP growth to accelerate to 3.7% as foreign investment into the energy sector begins to tick up following the passage of President Enrique Peña Nietos's recent energy sector liberalisation bill.
Manufacturing Sector Will Improve As Conditions In The US Normalise
|Manufacturing Will Re-Accelerate This Year|
|Mexico - Real GDP Growth And Growth In Selected Sectors|