Mexico growth still looks to be on solid trajectory, but output gap persists

Mexico's industrial production likely weakened further in May after slowing in Q1 and April. This could lead to another downgrade of the growth expectations for Q2 and 2015.

Despite possible improvement in H2, the output gap remains significant, while the unemployment rate is still higher than the lows seen in 2005-07, some of the recent decline was due to slower growth in the labour force, while employment growth was also low. 
As a result, the growth factor is not putting much pressure on Banxico to act urgently on the rate front. Currently, the economy is expected to grow by 2.6% in 2015 and 3.2% in 2016, says Societe Generale.