Mexico: Expenditure-based national accounts confirm Q4 slowdown
Expenditure-based national accounts data released on 21 March by the Statistical Institute (INEGI) confirmed a weak end to 2018 for the Mexican economy. In annual terms, GDP grew 1.7% in the fourth quarter, notably below the third quarter’s 2.5% increase, hampered especially by a lackluster domestic economy. In 2018, growth came in at 2.0%, a notch below 2017’s 2.1% outturn.
The fourth quarter’s slowdown was broad-based across the economy with both domestic demand and the external sector weakening. Fixed investment nosedived 2.3% over the same period of 2017 in Q4, notably contrasting Q3’s modest 0.4% growth. Policy uncertainty in the run-up to the new administration taking office, along with continued concerns over global trade and the relationship with the U.S., likely spooked investment. Meanwhile, private consumption growth dropped from 2.2% in Q3 to 1.4% in Q4, the worst reading since Q1 2013, despite high remittances inflows. Government spending also slowed from a 1.0% increase in Q3 to 0.2% in Q4.
On the external front, export growth halved although still posted decent growth. Exports grew 4.3% in Q4, down from Q3’s 8.6% and in line with softer stateside metrics. Import growth also decelerated, weighed on by a lackluster domestic economy and a weak peso (Q4: +5.6% yoy; Q3: +6.4% yoy). Taken together, the external sector swung from contributing to growth in Q3 to subtracting from growth in Q4.