MexECON Blog

Fourth Quarter GDP Rises 0.7 Percent

In an initial estimate, Mexico's fourth-quarter gross domestic product (GDP) was up 0.7% from the previous quarter, at constant prices and adjusting for seasonal variations.  That followed a rise of 0.5% in the third quarter and a revised gain of 1.0% in the second quarter.  According to the report, the expansion in the last period of the year came mostly from a 0.9% increase in the tertiary sector (services and government).  Within that sector, the industries posting the most significant gains were wholesale and retail trade, mass media, and transportation.  Fourth-quarter output in the secondary sector (mining, utilities, construction, and manufacturing) also grew well.  It posted a rise of 0.6%, as increases in manufacturing and construction were more than enough to offset the continuing decline in mining.  In the volatile but small primary sector (farming, ranching, forestry, and fishing), output posted a 2.2% decline in the fourth quarter.

Without seasonal adjustments, GDP in the fourth quarter was up 2.6% from the same period one year earlier, after increases of 2.2% in the third quarter and just 1.6% in the second.  The year-over-year rise in the fourth quarter stemmed mostly from healthy increases in the tertiary and secondary sectors.

GDP in all of 2014 was up 2.1% from the previous year.  That marked an acceleration from the 1.4% rise in 2013, but was still weaker than the average annual growth rate of 2.5% over the last two decades.

The report was released today by INEGI, the official statistics agency.

Comment:  Mexico's economic performance is finally looking more respectable.  The year-over-year growth of 2.6% in the fourth quarter marked the first time since late 2012 that annual growth was above the long-term average.  Moreover, the structure of growth is looking better, with key industries such as manufacturing, construction, and wholesale and retail trade all posting their strongest annual increases in several years.  It is true that some parts of the economy are weak, especially mining and government construction.  There is also some risk of a destabilizing outflow of capital when the Federal Reserve starts raising U.S. interest rates, as early as this summer, and low oil prices could eventually cause fiscal problems for the Mexican government.  Nevertheless, the Mexican economy appears to be in an acceleration phase for the time being.

Patrick Fearon, CFA
Vice President, Fund Management

GDP 2014 Q4 Initial QOQ

GDP 2014 Q4 Initial YOY

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