Mexico’s economy grew in the third quarter more than preliminary data suggested, driven by increased exports to the United States and consumer spending.
Official data released this Friday (24) showed that Gross Domestic Product (GDP) expanded 1.1% in the period from July to September compared to the previous quarter, above the initial reading of 0.9% reported last month .
The number was also above all estimates in a survey of economists, which pointed to a median forecast of 0.8%. In relation to the same period of the previous year, GDP grew 3.3%, above the projection of 3.2%.
According to projections from the International Monetary Fund (IMF) updated in October, Mexico should grow 3.2% this year and 2.1% in 2024, above Brazil, the largest economy in the region, whose GDP growth should remain and, 3. 1% and 1.5%, respectively.
Latin America’s second-largest economy has benefited from the strength of the US market and investments by companies in operations serving Mexico’s northern neighbor – a process known as nearshoring.
Consumer demand and a robust job market helped drive growth. President Andrés Manuel López Obrador is also racing to complete a series of projects, including a train through the southeast region of the country, before his term ends next year.
“It looks like the economy is still in very good shape,” said Marco Oviedo, strategist at XP Investimentos, adding that he may raise his GDP growth estimate for the fourth quarter. “We knew that industrial production expanded, but services also accelerated.”
Agriculture grew 2.6% in the quarter, while manufacturing gained 1.3% in the period and services rose 0.9%, according to the statistics agency. Construction was a key driver of the upward revision.
“It was a very good number with solid contributions from services and the secondary sector, especially construction,” said Alberto Ramos, chief economist for Latin America at Goldman Sachs. He said the reading indicated that the economy’s output gap, a variable relevant to monetary policy, was “even more positive” than predicted.
In a separate release on Friday, economic activity rose 0.6% in September, three times the median estimate of 0.2%, showing a strong expansion at the end of the quarter.
However, double-digit borrowing costs and a decline in government spending are expected to start weighing on growth. Economists in the latest Citibanamex survey see Mexico’s GDP expanding 3.4% this year and 2.1% in 2024.
