(Bloomberg) — Mexico’s economy grew slightly above a preliminary estimate in the fourth quarter, although activity is expected to keep slowing down in 2023 amid weakening US and domestic demand.
Latin America’s second-largest economy, heavily dependent upon profits generated by exports to the US, expanded 0.5% from the previous quarter, above the flash reading published last month, according to data released by the national statistics institute Friday. The result was also higher than the 0.4% median estimate of economists surveyed by Bloomberg.
Declining exports to the US, Mexico’s biggest trading partner, and a drop in the peso-value of remittances has curbed domestic consumption even though total dollar inflows from abroad hit a record in 2022, Gabriela Siller, director of economic analysis at Grupo Financiero Base, said.
“The peso strengthened, so there were fewer pesos for every dollar received, and inflation has been fairly high,” Siller said prior to publication of Friday’s report. “Consumption slowed precisely because of the lower purchasing power of the remittances and because of the fall in exports.”
In comparison to the previous year, the economy grew 3.1% in all of 2022, above the prior estimate of 3%. On a quarterly basis, the services sector gained 0.1%, agriculture expanded 2% and manufacturing rose 0.5%.
Sticky Inflation
At the same time, sticky and above-target inflation has Mexico’s central bank engaged in a record rate-hiking campaign that’s also serving to slow economic growth.
A government report Thursday showed consumer prices rose 7.76% in the first two weeks of February from the same period a year earlier. That’s down from a third-quarter peak of 8.7% but still more than double the bank’s target of 3%, plus or minus 1 percentage point.
What’s more, the minutes of the bank’s February meeting released Thursday explicitly signaled that additional tightening from the current 11% can be expected, further squeezing output and demand in Latin America’s second-biggest economy.
Read More: Banxico Cites High Core Inflation to Justify Rate Surprise
“Given that inflation is strong, that Banxico’s policy has been to raise rates for over a year and a half, and that since the middle of last year it already began to be restrictive, it makes sense that the demand in the private sector is starting to diminish,” said Joan Enric Domene Camacho, an economist at Oxford Economics.
Economists in a Citibanamex survey published this week raised their 2023 growth forecast to 1.10%, up from their prior 1.00% prediction. They also forecast that the central bank’s key rate would be 11.25% by the end of the year. Some economists predict that the bank could wait to cut rates until 2024.
–With assistance from Rafael Gayol.
(Recasts lead, updates with data and analysis starting in fifth paragraph.)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
