Mexico’s consumption growth to slow down significantly in 2016

In February, consumer confidence index of Mexico dropped to the lowest level since August 2014. With the persistent increase in consumer spending and low inflation, the low confidence level possibly shows the slowdown in growth and worsening view of business condition, according to Societe Generale. Stagnation in the labor market in the past year has also dampened the mood.

With the global economic scenario, expansion of growth appears to be very unlikely, and this is expected to maintain consumer confidence at current levels, noted Societe Generale.

“We expect the non-seasonally adjusted index to move up to 91.2 in March. However, the seasonally adjusted index will likely fall further to 91.2 from 91.4”, added Societe Generale.

Consumption growth is likely to significantly slow down in 2016, given the stagnation in labor market, decline in sentiment and projection of inflation to normalize in 2016, said Societe Generale.