Mexico’s economy demonstrated resilience in the second quarter of 2024, with GDP increasing by 0.2% from the previous quarter.
This modest growth mirrors preliminary estimates and follows a downwardly revised 0.1% increase from the prior period.
However, annual growth showed a more robust figure, with a 2.1% increase in Q2, slightly below the initial 2.2% forecast but a notable acceleration from the 1.5% rise in the previous quarter.
Data from the Instituto Nacional de Estadística y Geografía (INEGI) reveals that this represents the second consecutive quarter of slow growth.
While the service sector contributed minimally to GDP, with a 0.1% increase compared to 0.5% in Q1, the industrial sector showed improvement, growing by 0.3% after a -0.5% contraction in the previous quarter.
Primary activities, including agriculture and extractive industries, faced ongoing challenges with a -0.2% contraction.
Sector-wise performance
The service sector, a key driver of economic growth, saw a sharp slowdown with only a 0.1% increase in Q2, down from 0.5% in the previous quarter.
This decline suggests potential weaknesses in consumer spending and decreased demand for services. Contributing factors may include reduced consumer confidence, rising living costs, and overall economic uncertainty.
Conversely, the industrial sector showed promising recovery with a 0.3% growth, rebounding from a -0.5% contraction. This positive shift is attributed to higher manufacturing output and increased construction activity.
The industrial sector’s recovery highlights a responsive adjustment to market conditions, driven by rising internal investments and growing demand for manufactured goods.
The primary sector, including agriculture and extractive industries, experienced a more significant contraction of -0.2%.
Agriculture, in particular, suffered a steep decline of -4.9%, reflecting the sector’s vulnerability to adverse weather conditions, supply chain disruptions, and fluctuating global demand for exports. This highlights the urgent need for targeted support measures.
Annual performance: How good it was
Despite quarterly fluctuations, Mexico’s GDP grew by 2.1% year-over-year in Q2 2024, demonstrating the economy’s overall resilience.
However, the 0.6% annual decrease in June 2024, driven by a -2.9% drop in primary activities, raised concerns.
The downturn in mining and industrial operations underscores the need for strategic actions to enhance competitiveness and address sector-specific challenges.
Tertiary activities, including wholesale and retail trade, saw a 0.4% decline in Q2, primarily due to reduced output in these areas.
While financial services grew by 1% and professional, scientific, and technological services increased by 4.7%, the overall drop in wholesale and retail trade indicates weak consumer spending and market demand.
The varied performance within the service sector suggests shifting dynamics and highlights the need for tailored policies to boost productivity and innovation.
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