Mexican economy slows down during the second quarter of the year



During the second quarter of the year, Mexico's Gross Domestic Product fell into a slump, amid a slowdown in the industry and agricultural activities.

In real terms, the economy grew by just 1.6 percent at the annual rate, which contrasts with a 2.3 percent growth in the previous quarter. The dynamism was further lost at a quarterly rate, as GDP contracted 0.1 percent compared to the first three months of the year, which represented its largest decline in the last five years.

Alberto Ramos, economic badyst for Latin America at Goldman Sachs, pointed out that the resistance shown by the national economy to the waves of uncertainty generated by the renegotiation of the North American Free Trade Agreement (NAFTA) and the Mexican electoral process between Last October and March of this year, they pbaded invoice to the economic activity.

"The economy visibly slowed down during the second quarter of 2018, I expect the economy to pick up moderately again during the second half of the year, supported in part by strong external demand and a competitive currency," said Goldman badyst. Sachs

The main engine of the national economy, the service sector, which contributes about 60 percent of the Gross Domestic Product, lost dynamism compared to the previous quarter yielding a growth of 2.4 percent percent versus 2.9 reported in the first three months of 2018.

"We observe that the downward trend in the sector is consolidated, supported by low real wages and higher interest rates, as well as a cycle that is the late phase of expansion, "said Mariana Ramírez Montes, deputy director of Economic Analysis for Grupo Financiero Ve por Más.

But the low performance of economic activity was also derived from the slowdown shown in activities related to agriculture, livestock, fishing and hunting and, to a greater extent, the industries, which, during the months of April and June, grew 0.2 percent at an annual rate.

Meanwhile, the industrial sector has not managed to reverse the negative trend that has been dragging on since last year; "The low levels of production and lower oil prices have had a negative impact on the mining component," added Ramírez Montes.

Eduardo González, economic badyst of Citibanamex, said in a report that the country's economic activity will continue to advance in the short term, although at a slower pace and slower than that observed during the last two months of the first quarter of the year. "We reiterate our forecast of GDP growth of 2.3 percent for this year," said the specialist.

Alejandrina Salcedo, head of the Economic Planning Unit. THE FINANCIAL / L. flowers
  

SHCP maintains forecast for 2018

Despite the figures of INEGI, the Ministry of Finance and Public Credit (SHCP) maintained its growth forecast for 2018 in a range of 2 to 3 percent.

Alejandrina Salcedo, head of the Unit of Economic Planning of the dependency, considered that the GDP data during the second quarter could be affected by seasonal factors, such as the fact that Holy Week changed quarter this year.

Likewise, he pointed out that, although there was an improvement in domestic consumption, there was also a deceleration in investment, after the incipient reactivation that had been presented at the end of 2017.

"If we see the growth of the first half This year, it expanded at an annual rate of 2 percent compared to the second half of 2017, which had grown at a rate of 1.6 percent. With this we think that the economy will continue with its growth behavior and would not change the forecast range of 2 to 3 percent, "he said.

Salcedo said that towards the end of the year, the Ministry of Finance and Public Credit has a favorable outlook for the behavior of the United States economy, which had an important acceleration in the second quarter of the year and also of its industrial activity. which suggests that we could have a growth of our external demand, in addition to that so far this year private consumption has favorable growth.

Likewise, it considered that if an agreement is reached within the framework of the renegotiation of the North American Free Trade Agreement, there could be a boost to investment and a better economic performance towards the end of the year.

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