Mexican economic growth accelerates above expectations in Q2

The Mexican economy expanded more than projections in the second quarter as compared with the first quarter. The Mexican statistical office, INEGI, showed that the GDP grew 0.6 percent quarter-on-quarter. But on a year-on-year basis, the economic growth weakened to 1.8 percent from 2.8 percent year-on-year growth seen in the March quarter.

The segmentation released by the INEGI showed that the agricultural sector dropped 2 percent sequentially; however, it rose 1 percent on a year-on-year basis. Meanwhile, the industrial sector grew 0.1 percent quarter-on-quarter and 0.6 percent year-on-year. The service sector, once again, grew robustly by 0.8 percent sequentially and 4.1 percent year-on-year. This would suggest that the Mexican consumer continued to be quite strong just as was the case during the first quarter of the year.

On a year-on-year, basis, the Mexican economy did not grow strong, rising just 1.8 percent. This implies that the economy expanded 2.3 percent in the first half of this year as compared to the same period one year earlier with the primary sector expanding 3.5 percent, the secondary sector falling 0.3 percent and the tertiary sector leading the economy with a strong, 3.5 percent first half growth rate, noted Wells Fargo in a research report.

The preliminary figures are expected to reset the economic growth expectations for the second half of the year. GDP growth expectations surveyed by the Bank of Mexico had come up from a low of 1.5 percent at the start of the year because of the results of the U.S. presidential elections to 2 percent now. But the better than expected second quarter print might result in analysts to revise their expectations for the second half of the year and push growth to possibly 2.5 percent for the whole of this year, stated Wells Fargo.

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