Data Showing Economic Slowdown In October Published By INEGI

After several months of development, economic activity in Mexico slowed to a halt in October, raising concerns about the additional deterioration in 2023 as the post-pandemic recovery cycle draws to an end, Mexico News Daily reported.

The Global Indicator of Economic Activity (IGAE), a monthly gauge of economic performance, remained constant at 113.2 between September and October, the most recent month for which statistics are available, according to the National Institute of Statistics and Geography (INEGI).

According to Marcos Daniel Arias, an analyst at Monex, early indicators show that November's performance may have been even worse, with the Timely Indicator of Economic Activity (IOAE) indicating a fall of 0.1%.

“[Therefore] the last quarter of the year could be the weakest and open the door to scenarios of greater deterioration in 2023, a year for which the probabilities of a recession are still quite high,” he warned.

According to the INEGI report, the agricultural sector's 2.6% decline in October was a major factor in the economy's stagnation for the month. While the industrial sector expanded by 0.4%, recovering from two months of fall, the services sector also declined, although by a much smaller 0.1%.

As Mexico has recovered from the severe economic hit brought on by the coronavirus pandemic, these disappointing results cap off three straight months of growth and an overall upward trend over the previous year. The economy of Mexico shrank by 8.2% in 2020, but academics were taken aback by how quickly it recovered. Despite the slowdown in October, the IGAE still indicates a growth of 4.8% in real terms year over year since October 2021.

Arias said, “as of October, the accumulated variation through 2022 amounts to 2.82%, so it is very likely that the total growth of the economy will be between 2.50 and 3.00%, even if there is no progress during the remaining two months.”

Currently, the economic activity of Mexico remains at 0.1% a value below its pre-pandemic level and 0.4% below its historical maximum in September 2018. This suggests that the boost caused by the reopening of the economy is now tailing off.

In light of this, Fitch Ratings have forecast growth of 1.4% for Mexico in 2023, while the Economic Commission for Latin America forecasts 1.1%.