Economics: The outlook remains mixed judging by the latest data, with continuing challenges in manufacturing and domestic goods consumption
Indicators released over the past month once again showed growth, but the latest GDP data confirmed that although the Mexican economy continues to expand, it decelerated in the last quarter and especially during December. Moreover, three quarters of manufacturing branches are contracting, and even the automotive ones have slowed significantly.
Following months in which inflation pressures have been emanating from the non-core component, especially prices for livestock products and fresh produce, during the first half of February non core inflation fell by 1.32 percent, with significant help from precisely those categories. But the headline rate remains well above Banxico’s tolerance range, while core services inflation stands as the most significant obstacle to a frank decline in headline inflation and a subsequent relaxation of monetary policy.
On the demand side, private consumption and gross fixed investment indicators for November were favorable, although in the former case demand has been driven by a predilection for imported goods to the detriment of domestic industry, and the unfavorable retail sales numbers are likely to extend well into 2024.
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