Growth Rise Driven by Oil Output
GDP grew far more than expected in Q3, at a 12-month rate of 2.6%, vs. the market consensus projection of 2.3%, according to a preliminary report.
Commerce, the weightiest of the three main sectors, grew most robustly, with its 4.8% y/y expansion surpassing consensus growth predictions of 3%. It also overshadowed the 3.7% growth rate of Q3 2014. In 2015, household consumption firmed to its strongest levels of the past two years, a trend apparent in the sales results of the retail industry association (Antad), and in robust sales of cars and light trucks.
Following the release of the report, government spokespeople began to argue that the Mexican economy was entering an acceleration phase, and that the rise in consumption was being powered by improving household incomes.
But those claims don’t stand up to a careful review of Q3 GDP data. This shows that the main reason for the growth spurt was an additional 40,000 barrels of daily oil output, over Q2. When we strip out the petroleum factor, the economy actually slowed its sequential growth pace by 0.1 of a percentage point in Q3, to 0.8%, vs. 0.9% in Q2. When we include petroleum, GDP growth improved from 0.6% April to June, to 0.8% in Q3. This implies that the economy of non-petroleum goods and services hasn’t changed much.
The indexes of the three crimes used as indicators of public security in Mexico showed contradictory trends, according to end of October data from the National System of Public Security, which includes only reported cases.In the two most recent monthly reports, the rate of intentional homicide – considered the main indicator of how the battle against organized crime is going and, hence, the effectiveness of the government’s anti-crime strategy — began to show a higher murder rate. We expect Mexico to record 16,750 homicides this year, up from 15,653 reported for 2014. But kidnapping cases were down more than 17% in the first 10 months of the year.
In an unprecedented development in Mexican political history, a leak by the Office of the Prosecutor Specializing in Electoral Crimes (Fepade) revealed that it had asked a judge to issue a warrant for the arrest of the Ministry of the Interior’s Deputy Minister for Crime Prevention Arturo Escobar, on charges of committing an electoral crime. Escobar, accused of violating of electoral laws, and of engaging in other questionable practices, subsequently resigned. Why did it take the government so long to respond, and why didn’t it choose a less politically costly approach? It’s not clear whether the PRI has a specific conflict with the PVEM, or is just looking to burnish its image in the runup to the elections.
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