Mexico’s Economy Surprises with Quarterly Growth, But Deceleration Continues

In the first quarter of 2021, Mexico’s economy experienced better-than-expected growth compared to the previous three months. According to preliminary estimates from Mexico’s national statistics agency INEGI, the country’s gross domestic product (GDP) expanded by 0.2% quarter-on-quarter, slightly higher than the 0.0% that economists had anticipated. Despite this, the growth rate versus the same period last year was 1.6%, which was a slowdown from the previous quarter’s 2.5% growth.

The primary sector experienced a downturn in the first quarter, but this was partially offset by an increase in services. Andres Abadia, Chief Latin America Economist at Pantheon Macroeconomics, noted that the economic growth slowdown in Q1 was influenced by various challenges such as tighter financial conditions, difficult external conditions, and increased infrastructure spending. Despite these challenges, Mexico’s economy has now expanded for the tenth consecutive quarter.

Abadia added that the growth momentum in Mexico appears to be sluggish compared to recent trends. The figures confirm that the economic growth trend continues to decelerate, with factors like pre-election support to households not being enough to counterbalance the challenges faced by the economy. Overall, the data suggests a mixed performance for Mexico’s economy in the first quarter of 2021.