Mexico's GDP getting better but still far from a strong acceleration in growth

Mexico' GDP increased 0.8% q/q sa in Q3, slightly above the forecast. This growth was driven mainly by the expansion in the three sectors of the economy: secondary (0.8%), tertiary (0.8%) and primary activities (2.3%). In annual terms, the economy grew 2.6%, above forecast and market expectations (2.4%).

"We now expect the economy to expand in 2015 to 2.5%, from 2.3% previously. This better number is backed by stronger performance in industrial activities and a moderate path of growth in services", says Barclays.

There are still some downside risks, given the global slowdown that might affect the manufacturing industry and global trade, as well as some domestic conditions where oil production might still be affected and the constructions sector could remain weak. So we maintain unchanged our forecasts for 2016 and 2017 at 2.5% and 3.0%, respectively.

"The report confirms our view that the economy should start to grow more but at a moderate pace. In the near term, the slack in the economy will likely be still present, removing any risk of pressures on inflation, which should be also supported by other positive factors such as lower gasoline prices that will likely keep it under control. Given that and the rather limited contamination to prices from the MXN depreciation, Banxico could wait for more data in the coming months, decoupling its decision from the Fed and starting a hiking cycle more likely in next June 2016, as we have forecasted before", added Barclays.