He Gross Domestic Products of our country surprised financial experts by growing 1.5% in the third quarter of the year, above the market expectations.
With seasonally adjusted figures, economic activity expanded 1% in the period, being the largest quarterly growth from the end of 2021.
Despite the surprise, it will be difficult for activity to maintain the pace at the end of the year, which is why we maintain our forecast for GDP 2024 unchanged at 1.3%.
“In addition, the adjustments in the country’s institutional framework and the upcoming election in the US increase uncertainty about the economic outlook,” commented Alejandro Saldaña, director of financial analysis at the banco Bx+.
He projected additional moderation in spending, adding that it will be more discretionary, since job creation has lost strength, and inflation and interest rates – although they would decrease somewhat more – will remain high.
He explained that gross fixed investment would continue slowing down as the previous year’s expansion in public works continues to be reversed.
“For its part, private investment faces still high financial costs, and growing uncertainty associated with the constitutional reforms in the country and the next US presidential election.”
Saldaña stated that in the medium and long term, adjustments in the institutional framework that erode the legal certainty in the country they would limit the attraction of new investments, even those associated with industrial reorganization.
Regarding exports, he estimated that a certain slackness will continue in the short term, since the timely indicators of industrial activity in the EU (ISM manufacturing) remain at contractive terrain.
In this regard, Víctor Ceja, chief economist of Valmex, anticipated that going forward, economic activity could show a slowdown as a consequence of the weakness of the US manufacturing sector and the lagged impact of restrictive monetary tightening in both Mexico and the United States.
“Given this, for 2024, our growth estimate is 1.6% and for 2025, due to the efforts of fiscal consolidation, 1.4%.”
He said that the growth of this period of almost 1.5% is higher than that recorded in the second quarter, when GDP showed an increase of 1%. It indicated that by sector, at a quarterly rate, the Gross Domestic Product of the agricultural sector grew 4.6%, while the services sector and industry increased 0.9%, respectively.
“In annual terms, the agricultural sector was the most dynamic with a 3.8% growth followed by the services sector with 1.9%, and the industrial sector with 0.5%.”
Valmex pointed out that according to original figures for the Gross Domestic Product, during the third quarter of the year an annual growth of 1.5% was recorded. where by sector, in the case of agriculture, an increase of 4.1% was shown, followed by services with 2.0% and the industrial sector with 0.6%.
“Thus, the average growth during the first nine months of 2024 was 1.7%.” Meanwhile, Iván Arias, director of financial analysis of Citibanamex pointed out that the upward surprise is related to a greater resilience than estimated in consumption and investment, which could reflect, in part, lagged effects of the increase in public spending in the first semester.
For the bank, yesterday’s results imply that GAE September grew approximately 0.4% monthly from a -0.3% drop in August.
“And these prospects point to a weakening of economic activity in the fourth quarter of 2024; We project a slightly positive variation in the Gross Domestic Product for that period.”
“We now estimate that accumulated growth in 2024 will be 1.5%.” /Emanuel Mendoza
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Interview between Time.news Editor and Alejandro Saldaña, Director of Financial Analysis at Banco Bx+
Time.news Editor: Good morning, Alejandro. Thank you for joining us today.
Alejandro Saldaña: Good morning! It’s a pleasure to be here.
Editor: Let’s dive right in. The recent report showed that our Gross Domestic Product (GDP) surprisingly grew by 1.5% in the third quarter, exceeding market expectations. What do you attribute this growth to, given the prevailing economic uncertainties?
Saldaña: It certainly is a positive development, and it can largely be attributed to a rebound in certain sectors post-pandemic and consumer spending that outpaced earlier forecasts. However, we need to approach this growth with caution; the economic landscape is still quite volatile.
Editor: That caution seems well-placed. You mentioned that the quarterly growth is the largest since late 2021. Are there specific sectors that have driven this growth, or was it more broad-based across the economy?
Saldaña: It’s been somewhat broad-based, but we did see particular strength in consumer services and trade. That said, as we move into the final quarter of the year, it might be challenging to maintain that momentum, especially with projected adjustments in consumer spending.
Editor: Interesting. What factors are contributing to this potential slowdown?
Saldaña: There are several factors at play. Job creation has slowed down, which directly affects discretionary spending. High inflation and interest rates, while expected to decrease slightly, are still elevated. These elements create an atmosphere of uncertainty affecting consumer confidence and spending behavior.
Editor: Speaking of uncertainty, you brought up the upcoming US presidential election and the adjustments in our country’s institutional framework. How do you see these elements impacting our economic outlook?
Saldaña: The institutional framework is crucial for investment confidence. If adjustments undermine legal certainty, it deters both domestic and international investments. The US presidential election adds another layer of unpredictability, which can lead to cautious behavior among investors.
Editor: You mentioned that gross fixed investment is expected to slow down. Can you elaborate on what’s behind that trend?
Saldaña: Certainly. The previous year’s expansion in public works projects is reversing, meaning fewer new investments in that area. On the private side, high financial costs continue to burden companies, especially with lingering uncertainty from constitutional reforms. This environment leads to delays or reductions in investment decisions.
Editor: What about our export sector? You hinted at potential slackness. Are external factors particularly influencing this?
Saldaña: Absolutely. There’s evidence that the industrial activity in the EU is contracting, which impacts demand for our exports. Combined with the overall slowdown in the US manufacturing sector, we may see dampened export performance in the short term.
Editor: Given all these factors, what’s your growth outlook for 2024?
Saldaña: We are holding our forecast steady at 1.3% for 2024. While we might see some growth, it’s tempered by the potential challenges we’ve discussed.
Editor: Thank you, Alejandro, for sharing your insights. Before we conclude, any final thoughts on how consumers and businesses should navigate this uncertain economic landscape?
Saldaña: Yes, my advice would be for consumers and businesses to remain prudent. Monitoring spending, focusing on essentials, and considering the long-term impacts of investments will be crucial as we navigate this transitional phase.
Editor: Wise words indeed. Thank you again for your time and insights, Alejandro. We look forward to seeing how the economic landscape evolves in the coming months.
Saldaña: Thank you for having me! I appreciate the opportunity to discuss these important issues.