Economics: First quarter GDP and March IGAE anticipate further weakening for the remainder of the year
Last week saw the release of revised GDP data for the first quarter of 2025, which showed a 0.6% seasonally adjusted annual rate of growth. The week also saw the IGAE for March, which reported a -0.1% annual decline. In most branches of activity, the economic indicators for March and those available for April show a greater deterioration than that observed if the total for the first quarter is averaged, given that in February there had been a slight upturn.
Construction showed weak growth in March after experiencing significant declines in the second half of 2024. Growth is concentrated in housing, while public works continue to contract sharply, and non-residential private construction shows weak growth. Manufacturing registered a decline due to the tariff uncertainty of recent months, which added to a previous weakening of the domestic market, while services maintained their deceleration trend. In this context, we maintain our growth forecast of -0.1% for the current year and 0.5% for the following year.
In other indicators released last week, annual consumer inflation for the first two weeks of May rose to 4.22%, surpassing the 3.99% close of 2024. This increase was due to a sharp rise in the non-core component of 121 basis points with respect to the previous fortnight, bringing the measure to 4.78%, the highest level so far in 2025. The core component rose slightly, to 3.97%, up from 3.96% the previous fortnight. However, it also stood above the close of 2024 (3.69%). Inflation in the first half of May is a new setback that should indicate to Banxico that price growth is not under control.
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