Mexican economy grows 3.6% in second quarter

Mexico’s economy, the second largest in Latin America, grew by 3.6 percent in the second quarter of 2023 from the year-earlier period, preliminary official figures showed Monday.

Compared with the previous quarter, gross domestic product (GDP) increased by 0.9 percent, boosted by growth in services, the national statistics agency INEGI reported.

In the first half of 2003, GDP also grew 3.6 percent year-on-year, it said.

“We’re doing well,” President Andres Manuel Lopez Obrador said in response to the figures.

The Mexican economy grew by 3.1 percent in 2022 and 5.0 percent in 2021, bouncing back from the worst slump in decades due to the coronavirus pandemic.

The economy still has more potential to recover, according to Gabriela Siller, head of economic analysis for the financial group Banco BASE.

“Mexico has shown favorable growth in recent quarters, but compared to pre-pandemic levels, GDP expansion is low compared to other countries,” she said.

Mexico hopes to benefit from the so-called “nearshoring” trend of US companies like electric carmaker Tesla moving their production closer to home instead of Asia.

The central bank, which has raised its benchmark interest rate to a record high of 11.25 percent to tackle inflation, has forecast GDP growth of 2.3 percent for 2023.

The Competitive Intelligence Unit, a consulting firm specialized in the Latin American region, said that while second-quarter growth was better than expected, there may still be dangers ahead.

Risks to the outlook include “high interest rates and their possible persistence which reduce the incentives to invest and consume goods in the short term,” it said. (BSS/AFP)