MexECON Blog

Balanced Growth in the Second Quarter

In an updated estimate, Mexico's second-quarter gross domestic product (GDP) rose 0.9% from the previous quarter, after adjusting for seasonal variations and stripping out price changes.  The growth, unrevised from the initial estimate, was weaker than the 1.2% expansion in the first quarter, but it was still faster than the 0.7% increase in the last quarter of 2011.  According to the report, released Friday by the official statistics agency INEGI, the country's growth in the second quarter was well balanced.  Exports, private investment, and personal consumption each contributed approximately one-third of the growth in the quarter.  Private investment rose 2.0%, and even though that was weaker than the increase in the first quarter, it was enough to bring overall investment to 22.3% of GDP, its highest level since early 2009.  Meanwhile, exports rose 0.9% in the second quarter, and personal consumption rose 0.4%.  Imports declined slightly in the second quarter, providing a bit of additional growth, but that was offset by modest declines in public consumption, public investment, and inventory investment. 

Without seasonal adjustments, Mexico's second-quarter GDP was up 4.1% from the same period one year earlier, after a year-over-year increase of 4.5% in the first quarter.  That marked Mexico's tenth straight quarter of above-average growth.  In the two decades from 1991 to 2011, the country's economy grew at an average rate of just 2.6% per year.

Comment:  I've been talking about Mexico's above-average economic growth for some time now, but I have also emphasized that the growth is quite well balanced.  With the current expansion resting of several different legs, Mexico is in a better position to weather any potential new headwinds from abroad, such as another worsening of the European debt crisis.  If the situation abroad worsens dramatically, Mexico's economy could still be thrown for a tailspin.  However, the most likely scenario going forward is for Mexican growth to merely slow modestly in the face of cooling activity worldwide.

Patrick Fearon, CFA
Vice President, Fund Management

GDP 2012 Q2 Revised

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