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
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