Economics: Recent economic indicators suggest that 2024 GDP growth will break slightly below 2%
The economy continued to slow during the second quarter. After first quarter aggregate demand slowed to 2.6% YoY, indicators for April revealed a further loss of momentum, with the monthly GDP proxy (0.9% yoy) sputtering to its lowest reading in 30 months. Industrial activity only crawled 0.6% higher as manufacturing contracted further, services lost steam, the construction boom continued to fizzle, and the drought pummeled agricultural output. Private consumption continued to grow at roughly two-thirds of its 2023 pace in April as that of domestic goods fell, while that of imported goods increased 20.8% yoy thanks to the forex effect.
In June, the prospect of a Morena mega majority in both chambers of Congress and AMLO’s insistence on passing reforms in September seen as threatening legal certainty rattled financial markets in June with the peso losing 7.7% against the dollar. And just this past week, with non core items further propelling consumer inflation in the first fortnight of June and analysts ratcheting up their CPI expectations for the coming months, Banxico’s policy board voted to pause for a second time with its target reference rate at 11.0%, even as the unanimity of the March meeting failed to hold, with one board member voting for a quarter-point cut.
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