Mexico Economy Rebounds More Than Expected in Second Quarter

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Or sign-in if you have an account.8}593u4j[[hc6x]gv{9g3f}s_media_dl_1.png National statistics agency, Bloo(Bloomberg) — Mexico’s economy rebounded in the second quarter after exports rose to a record despite prolonged trade tensions with the US. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountGross domestic product grew 1.5% in the second quarter compared to the prior three months, according to preliminary data published by the national statistics institute Thursday. The print follows the 0.6% contraction registered in the previous quarter and came in above the 1.4% median estimate of analysts surveyed by Bloomberg. From a year ago, second-quarter GDP rose 2.2%, above the 1.6% estimate, and up from the revised year-on-year 0.1% growth in the three months through March. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againExports have provided some relief to the Mexican economy during a 19-month decline in gross fixed investment, which only came to a halt in April thanks to government spending. In June, exports rose more than 34% compared to the same month a year earlier, also contributing to a trade surplus that nearly doubled to $4.09 billion that same month.Mexico’s economy expanded unevenly in the quarter, with growth concentrated in agriculture and services. Primary activities, including farming, livestock and fishing, rose 7.3% from a year earlier, the strongest increase among the three broad sectors.Industry remained the weakest part of the economy. Secondary activities — including manufacturing, construction, mining and utilities — advanced just 0.8% year over year, pointing to continued softness in the productive sector.“Second-quarter growth does not signal a shift in the trend of Mexico’s economic activity,” said Gabriela Siller, head of economic analysis at Banco Base. “Nor does it mean that the stagnation has been overcome.”Increased spending on tourism, retail and entertainment helped sustain household consumption. Robust remittance inflows, stronger infrastructure investment and resilient demand from the US added further support, said Andrés Abadía, chief Latin America economist at Pantheon Macroeconomics.“Most of these tailwinds have now faded, however, while higher energy prices and persistent trade uncertainty continue to weigh on the outlook,” he said.Last month, the central bank ended a nearly two-year cycle of interest rate cuts despite inflationary pressures stemming from the war in Iran. Looking ahead, policymakers have said “it will be appropriate to maintain the reference rate” at its current 6.50%.The second-quarter rebound is unlikely to alter next week’s central bank decision, with a hold at 6.5% seen as virtually certain, but it could push policymakers to adopt a less dovish tone and strengthen the case for a rate increase within the next six months, said Kimberley Sperrfechter, senior Emerging Markets economist at Capital Economics.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.President Claudia Sheinbaum has proposed a series of policies — ranging from tax incentives to streamlined investment approvals — to stimulate private sector spending, but the push hasn’t yet yielded significant results. That’s kept the Mexican economy dependent on its exports, with the vast majority sent to the US.Last week, Sheinbaum’s officials and their US counterparts held a third round of talks in Mexico City to discuss the USMCA trade pact, which has entered a phase of annual reviews. In the negotiations, Washington has asked Mexico to mirror its tariff wall against Chinese steel and aluminum by imposing duties on imports from outside North America.Although Mexican exports continues to enjoy preferential access to the US market thanks to the USMCA, Trump has repeatedly cast doubt on the treaty’s future, saying he doesn’t want to update it despite once touting it as a great deal he negotiated during his first term in office.—With assistance from Rafael Gayol and Robert Jameson.(Add details on GDP performance by sector and analysts comments starting in the fifth paragraph)Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.