Mexico’s economy grew 3% in 2022, aligned with market expectations

Mexico’s economy grew 3% annually in 2022 with seasonally adjusted figures, according to the Quarterly Gross Domestic Product Timely Estimate (EOPIBT) of the National Institute of Statistics and Geography (Inegi).

The 3% Gross Domestic Product (GDP) expansion aligned with market expectations.

Secondary activities grew 3.2% annually in 2022, followed by primary activities, which increased by 2.8%, and tertiary activities, which grew 2.7% annually.

The growth of the Mexican economy began to surprise in the third quarter of 2022 due to the dynamism of exports and domestic consumption.

Hence, year-end forecasts adjusted upwards and converged with the government’s growth estimate of 1.9% and 2.9%.

Banco de México (Banxico) and the market consensus estimated that GDP would grow by 3% in 2022, very similar to the ceiling of the range forecast by the Government’s fiscal authorities.

Mexico’s GDP grew 0.4% in the fourth quarter of 2022

In the fourth quarter of 2022 and with seasonally adjusted figures, the EOPIBT results show a quarterly increase of 0.4% in real terms.

At a quarterly rate, the timely GDP of primary activities advanced by 2%, that of secondary activities by 0.4%, and that of tertiary activities by 0.2% in the fourth quarter of 2022.

In the reference quarter, at the annual rate and with seasonally adjusted series, the timely GDP estimate rose 3.6% in real terms. By economic activity, the increases were: 6.3% in primary activities, 3.6% in tertiary activities, and 3% in secondary activities.

Inegi indicated that the estimates could change with respect to the figures generated for the traditional quarterly GDP, which will be published next February 24, 2023.

ANALYSTS IN MEXICO MADE FURTHER UPWARD REVISIONS

Gabriel Yorio, Mexico’s Undersecretary of Finance, said yesterday, Monday, January 30, that Mexico is growing above its historical average and that the economic dynamism has been driven by increases in almost all sectors, as well as by high levels of employment and private consumption growth.

He noted that in 2022 growth was above the consensus of several analysts and questioned that during the year, there was an unusual divergence between decision makers’ perception of the economy compared to analysts who, in the middle of last year, believed that Mexico’s growth would be between 1.6% and 1.8%.

This divergence made Mexico one of the countries where analysts made the most upward revisions to economic growth.

“We are currently seeing a growth that is around 2.9 and 3% with the latest information published by Inegi,” Yorio estimated.

He said that company relocation “sounded” to many economic actors as an abstract idea even though there was already evidence of pressure on rent prices, especially on demand for industrial parks and in Mexico’s industrial, manufacturing, and logistics enclaves.

“The relocation of companies in Mexico is a reality, and the North American bloc is expected to become one of the increasingly integrated regions with respect to trade exchange and manufacturing chains that generate more value and employment in the region and the country,” he maintained.

This story was updated at 7:22 a.m. with the position of Treasury and Undersecretary Gabriel Yorio.

With information from Bloomberg