Economics: Surprisingly strong 3Q results bode well for 2022, although methodological doubts remain

MEXICO - Report 07 Nov 2022 by Mauricio González and Francisco González

The most recent broad readings of economic activity in Mexico proved to be much stronger than had been expected. Inegi’s preliminary estimate of third quarter GDP showed the economy expanding an annual 4.3% according to seasonally adjusted data. The IGAE monthly GDP proxy for August showed a 4.2% rise.

While manufacturing continued to contribute significantly, the real surprise was a spike in tertiary activity. Much of that improvement reflected a major reactivation of tourism-related activity, especially in the first two months of the quarter. Another factor that explains the degree of service growth was the extent to which we saw a more favorable base effect in business support and waste management services given the implementation of the reform to the law regulating outsourcing employment services.

Third quarter GDP results may be posing methodological challenges for gauging economic activity, but we will have to wait for the final GDP production and aggregate demand figures for the quarter that are due out a few weeks from now. In the meantime, we are analyzing the available GDP data and their implications for 2023 as well as our estimates of full-year GDP for 2022, which we are revising higher.

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