Mexican economy grew for sixth consecutive quarter in Q1

A general view shows cars along Reforma Avenue in Mexico City

(Reuters) – Mexico’s economy grew for the sixth quarter in a row in the first quarter, data from Latin America’s second-largest economy showed on Friday, with growth in line with market expectations.

Gross domestic product (GDP) increased 1.0% in the period from the previous three months, statistics agency INEGI said, matching forecasts from economists in a Reuters poll.

The figure, however, came in slightly below preliminary estimates disclosed by INEGI a month ago, when the statistics agency said GDP had likely increased 1.1% in the period on a sequential basis.

Economists had already dubbed the preliminary first quarter data as “solid,” although noted a slowdown in the U.S. economy and tight monetary policy would probably soften Mexico’s performance in the coming quarters.

“Overall, these numbers confirm a decent start to the year,” Pantheon Macroeconomics’ chief economist for Latin America, Andres Abadia, said about Friday’s figures. “But sequential data is confirming a gradual deterioration in recent months.”

Additional indicators released by INEGI showed that economic activity in the country shrank 0.3% in March from the previous month.

Abadia said the “good news” was that fading growth momentum and falling inflation would make it easier for the central bank to adopt a dovish tone soon after pausing a nearly two-year rate-hike cycle earlier this month.

The quarterly GDP growth, according to INEGI, was driven by a 1.5% jump in the tertiary or service sector and a 0.6% increase in secondary activities, which comprise manufacturing.

Primary activities such as farming, forestry, fishing and mining, nonetheless, shrunk by 2.8%.

In annual terms, the agency added, the economy expanded 3.7% in the first three months of 2023 compared to a year earlier. That was slightly below the 3.9% growth expected by the market and projected by last month’s preliminary data.

(Reporting by Gabriel Araujo; editing by Steven Grattan, Jason Neely and Conor Humphries)