Economics: Prem. 3Q GDP Tells a Familiar Story
The Estimate of Quarterly GDP for the third quarter, published recently by the National Statistics Office (Inegi), showed 2.4% growth compared to the same quarter a year earlier. The expansion was driven primarily by a 4.6% increase in primary activities and 2.9% growth in those of the tertiary sector. Although the preliminary result was stronger than expected, the estimate confirms that the economy continues to lumber along at a moderate pace. Furthermore, different sources, as well as other indicators also from the National Statistics Office, do not point to a very positive future.
A few days after Inegi released its preliminary data on GDP growth, Mexico’s central bank published its quarterly report on inflation, in which it lowered its GDP growth forecast interval for the current year to 1.9% and 2.4% from a previous 1.7% to 2.5%.
The monetary authority has stated that the balance of risks to growth have deteriorated due to the slowing of external demand, weak oil prices and the ongoing erosion of Mexico’s oil production platform.
Banco de México’s most recent monthly survey (October) of private sector economists’ estimates of the major economic indicators showed that markets expect the definitive report on third quarter GDP to show 2.19% growth and also revealed that they had once again lowered their estimate of growth for full-year 2015, scaling it back to 2.29% from a previous 2.31%.
In other news, consumer sentiment firmed slightly in October. The consumer confidence index (CCI) climbed 0.8% above the reading of a year earlier as opposed to the 0.7% decrease reported for October of 2014. The latest result marked an improvement over the 1.4% index slippage reported for September of the current year.
In keeping with the results of previous months, consumer expectations of being able to acquire durable goods was the component that contributed the most to consumer optimism in October. In fact, it is the only component that has kept the CCI “afloat” as the other four components have consistently registered negative or at best scantly positive results so far in 2015.
For the month, expectations of making purchases of big ticket items rose 7.2% year on year, a rise that was more than double the 3.1% improvement recorded a year earlier.
The results from this component help to shed some light on the strength of domestic auto sales, not only during October but also year to date. According to the Mexican Association of the Automotive Industry (AMIA), 119,867 automotive vehicles were sold in October, 18.8% more than in the same month of 2014. Through the first ten months of 2015, 1.064 million cars and light trucks were sold, 19.6% more than in the same period a year earlier.
Moreover, Walmart de México announced a 10.8% rise in same store sales, its best SSS performance since Mexico’s inaugural Buen Fin seasonal sales blitz in November 2011.
Such results suggest that internal consumption will remain the main driver of economic growth for the balance of the year.
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