Mexico’s economic activity continued to expand in the third quarter, marking the eighth consecutive period of growth. The country’s gross domestic product (GDP) grew by 0.9% from the previous quarter in seasonally adjusted terms, according to the National Statistics Institute. This represents the fastest quarterly growth since Q3 2022.
The industrial sector saw a significant boost, with a 1.4% increase in production, while services also experienced growth of 0.6%. Agricultural production saw a notable rise of 3.2%.
Mexico’s economy has exceeded expectations in 2023, driven by strong demand for Mexican goods from the United States. Additionally, record remittances, employment gains, and increasing wages have fueled growth in household consumption.
Carlos Morales, director for Latin America sovereigns at Fitch Ratings, highlighted the remarkable growth in private investment, specifically in machinery and equipment and non-residential construction. He emphasized that this trend demonstrates the growing demand for Mexican manufacturing production due to near-shoring effects. Morales predicts that near-shoring will continue to present significant growth opportunities for Mexico over the next few years.
Unadjusted third-quarter GDP was up 3.3% compared to the same period in 2022, and the country’s overall GDP increased by 3.5% in the first nine months of this year.
While Mexico’s economy is projected to expand by a solid 3.5% in 2023, some economists are less optimistic about the future. Jason Tuvey, a senior emerging markets economist at Capital Economics, expressed doubts about the sustainability of this strength in 2024. He cited high interest rates as a potential hindrance to growth and speculated that a slowdown in the U.S. economy could dampen export demand. However, Tuvey also mentioned that increased government spending ahead of next year’s election could help offset these challenges.
Overall, Mexico’s economic performance in recent quarters has been encouraging, with various sectors experiencing growth. While challenges may arise in the near future, the country remains well-positioned for continued expansion.
Anthony Harrup, Wall Street Journal
