Tuesday, March 25, 2014

Mexican economy off to a shaky start in 2014, January data shows

*Updated Apr. 29*
Guadalajara -
Mexico's economy grew but 0.8% on an annualized basis in the first month of the new year, a federal agency reported today. Government economists had forecast January growth of 1% to 1.4%.

The National Statistical and Geographic Institute (INEGI) said a weak performance by the primary sector was responsible. Primary sector industries include agriculture, livestock and fishing.

Mexico's gross domestic product expanded 1.1% in December.

On Feb. 21 the government reported that Mexico's GDP growth last year was a paltry 1.1%, far below the originally projected 4%. It was the country's worst performance since 2009. Mexico gets a very poor 2013 economic report card.

The PRI administration of president Enrique Peña Nieto maintains that this year will be much better, with growth reaching 3.9%. But banks and private investment houses are more conservative in their estimates, and have already downward revised their prognostications for 2014. Weak U.S. demand, domestic insecurity will continue to challenge Mexican economy in 2014.

As the first quarter of 2014 comes to a close, there are signs that this year could be a repeat of last, despite the government's brave face. Between January and March, 2013, Mexican GDP grew 0.8%, compared with an extraordinary 4.9% rise during the same period in 2012. The news went from bad to worse in the second, third and fourth quarters of 2013. Banixco raises storm flag warning on Mexican economy. Today's report by INEGI will suggest déjà vu to attentive analysts and concerned investors.

In February Mexico's stock market, the Bolsa de Valores, closed out with a 5.13% monthly decline, its worst loss since September 2011.

In remarks this afternoon to the National Labor Productivity Committee, Mexican Finance Minister Luis Videgary said the country needs to embrace technology, stimulate competition and focus on promoting the "formal" economy. About 60% of the Mexican labor force toil in the so-called informal economy, in marginal self-employment enterprises. Such workers enjoy no benefits, have no safety net and live on what they can earn from day to day sales and services. The PRI administration is trying to change that. Peña Nieto announces plans to get more workers on real payrolls.

Feb. 18 - Mexican economy continues to shed jobs
Feb. 28 - Domestic insecurity presents challenge to Mexican economic growth.
Apr. 29 - Primary sector industries grew 1.7% in February compared with the same month in 2013, according to an INEGI analysis last week. That was good news, but it does not mean that Mexico's GDP itself grew that much. Analysts say the economy remains week, and will likely grow between two and three percent this year. The central bank, Banixco, will update its 2014 forecast within the next 30 days.

May 23 - Mexico slashes 2014 growth projection, on sluggish first quarter economic performance
May 8 - Mexico says insecurity costs it $16.6 billion USD annually, and 50 lives a day
May 7 - Mexican economy remains stagnant in 2014, but the government paints a bright picture

Central bank director Agustín Carstens says Mexico is poised for significant growth in 2014, but the first numbers of the year won't lend confidence to that claim. In New York this week, Carstens told an economic conference that by the end of the current administration - 2018 - Mexican GDP should hit 5% annual growth.That's a far more conservative prognosis than the government delivered a year ago.

© MGR 2014. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.

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