Analysts JP Morgan It raised Mexico’s economic growth forecast for the third quarter of GDP, as well as for 2022, after August data indicated stronger-than-expected production from the country’s manufacturing sector.
Analysts’ forecasts for July-September now call for 1.5% growth, compared with a previous estimate of 0.5%, pushing the full-year forecast to expand 2.2%, from 2% previously.
The number is still lower than the Treasury Secretary’s forecast in early September, Rogelio Ramirez de la Owhich estimated GDP growth of 2.4% in 2022.
JP Morgan attributed the change to increased production from high volume Mexico’s manufacturing sectorAccording to trade data for the month of August. The main sector supports a huge car production and assembly industry.
“The main source of uncertainty is manufacturing, as we saw mixed signals among the August data available,” he said, noting that factory shipments had already improved slightly, adding to a small gain in July.
Analysts noted that while factory production may have risen in the third quarter, the forward-looking data has “notably deteriorated” and they expect factory production to eventually slow.
“We believe the economy will slow as strong wage-driven private consumption is offset by an increase in imports and a decline in external demand,” he said.
Although growth remains better than expected, JPMorgan said this could eventually lead to external account imbalances, such as the trade deficit.
Mexico’s National Institute of Statistics and Geography (INEGI) on Tuesday reported a seasonally adjusted trade deficit for August of $3.6 billion, compared to the negative balance of $4.4 billion released in July.