Economics: Revised second quarter GDP and June IGAE reflect a deepening downtrend

MEXICO - Report 27 Aug 2024 by Mauricio González and Francisco González

Revised second quarter GDP figures were released late last week that include a more complete statistical breakdown by sector and branches and a slight downward adjustment from the 1.1% yoy seasonally adjusted growth figures to a revised 1.0% increase. The downward revision is probably due to the June figures having turned out to be worse than Inegi had anticipated, since the IGAE grew by 1.1% that month, after increasing by 1.5% in May, as the stagnation in industry was coupled with a more pronounced downturn in the services sector.

The recent performance of the economic indicators points to a weakening trend that could worsen if risks materialize on both the external and internal fronts. On the internal front we have the approval of the so-called “Plan C” reforms, which could have a very significant impact on investment, as well as the critical financial situation of Pemex and the required cut in the public deficit via spending for the coming year. External risks include the protectionist narrative and threats of sanctions that have been a constant feature of the current U.S. presidential campaign and that could translate into trade restrictions, regardless of who becomes president in the United States, although with a greater impact in the event that Donald Trump wins.

In this week’s Outlook we analyze the recent evolution of economic activity and its prospects.

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