Unpacking the oddities in Mexican GDP

The final estimate of Mexican Q3 GDP data was revised down to a 0.4% q/q fall (original -0.2% q/q), but the breakdown showed the contraction was almost entirely due to an outsourcing law that hit services output. Regardless of this statistical quirk, Mexico’s recovery will remain one of the weakest in the region.
Nikhil Sanghani Emerging Markets Economist
Continue reading

More from Latin America

Latin America Economics Weekly

Central banks and Omicron, Colombia CA risks

The emergence of the Omicron variant presents a key risk to economic recoveries in the region, although the experience from the latest virus wave in the region provides a reason to think it will not result in a permanent hit to output. In the meantime, central banks across the region will remain focussed on tackling high inflation with further rate hikes. Otherwise, data this week showed that Colombia's current account deficit widened even further in Q3 and the recent drop in oil prices will add to the growing external vulnerabilities there.

3 December 2021

Latin America Data Response

Brazil Industrial Production (Oct.)

The surprise 0.6% m/m fall in Brazilian industrial production in October and weakness in the surveys for last month provide early evidence that the contraction in the economy last quarter may be followed by another q/q drop in GDP in Q4.

3 December 2021

Latin America Data Response

Brazil GDP (Q3 2021)

The 0.1% q/q fall in Brazilian GDP in Q3 confirmed that problems in the agricultural and industrial sectors tipped the economy into a technical recession. And with financial conditions tightening, the terms of trade worsening, and the threat from the new Omicron variant, the risks to our GDP growth forecast for next year of 1.3% are skewed firmly to the downside. Copom may temper its hawkish sentiment a bit at its meeting next week, with a 150bp hike (rather than 175bp) now looking more likely.

2 December 2021

More from Nikhil Sanghani

Latin America Data Response

Mexico Bi-Weekly CPI (Nov.)

The surge in Mexico’s inflation to 7.05% y/y in the first two weeks of November – the highest since 2001 – was partly a result of unfavourable base effects, but underlying price pressures were also relatively strong. We still think that the central bank will stick to its gradual pace of tightening with another 25bp rate hike, to 5.25%, at its December meeting but the chance of a more aggressive move is increasing.

24 November 2021

Latin America Economics Update

A look ahead to Chile’s election

The frontrunners in Sunday’s presidential election in Chile, Gabriel Boric and José Antonio Kast, hold different views on the desired size of the state in the economy, but both advocate relatively loose fiscal policy. This would help to support economic growth in the near term but could raise concerns about inflation and public debt in the medium term. Alongside lingering uncertainty over the new constitution, these factors are likely to keep Chilean financial markets on the backfoot in the coming quarters.

18 November 2021

Latin America Data Response

Chile GDP (Q3 2021)

The 4.9% q/q surge in Chile’s GDP in Q3 took output not only above its pre-pandemic level but also its pre-crisis trend. The strength of the figures means that we now expect above-consensus growth of 12.0% this year (from 11.0%) and 4.0% next year. With increasing signs that the economy is overheating, the central bank will continue its aggressive tightening cycle in the coming months.

18 November 2021
↑ Back to top