Mexico Posts Solid Second-Quarter Growth on Economy Opening
(Bloomberg) -- Mexico’s economy grew solidly in the second quarter, as domestic demand and the country’s reopening helped spur the services sector while U.S. growth drove manufacturing.
Gross domestic product rose 1.5% from the previous three-month period, showing the economy accelerated from the beginning of the year despite missing a 1.6% growth estimate by analysts surveyed by Bloomberg. From a year ago, GDP rose 19.6%, according to final data from the national statistics institute published Wednesday.
Latin America’s second-largest economy has gained steam since last year, spurred first by U.S. demand and later by domestic consumption, especially in the services sector. The central bank boosted the recovery by cutting its interest rate to a multiyear low before spiking inflation forced it to reverse course in June. Analysts in a Citibanamex survey see the economy growing 6.1% this year.
Services grew 2.0% from the previous quarter, while agriculture expanded 0.8% and manufacturing rose 0.3%, according to the statistics institute.
“Overall, a relatively solid first half of the year,” said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics. “The outlook for the second half remains relatively benign, but we are closely watching some downside risks.”
Among the economic challenges, analysts see more key rate increases on the horizon, as above-target inflation curbs purchasing power. Complicating matters further, a third wave of the pandemic has also threatened some of the hard-won gains.
“For the moment, we maintain our growth estimate for the whole year at 6.5%, but if risks increase, we could see a downward revision,” said Janneth Quiroz Zamora, vice president of economic research at Monex Casa de Bolsa.
Mexico’s economy contracted by 8.2% in 2020, its worst downturn in nearly a century.
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