Manufacturing-Led Recovery On Track
BMI View: Recently-released Mexican Q313 GDP data reaffirms our expectations for a manufacturing-led recovery to continue to gain traction over the coming months. While construction output continues to contract, we expect the sector to begin a gradual recovery in 2014 as infrastructure stimulus comes on line and ongoing project delays are addressed, contributing to an acceleration in the Mexican economy next year.
We believe that the Mexican economy, after deteriorating sharply throughout most of 2013, is approaching an inflection point and is set to improve significantly in 2014. Real GDP growth in Q313 came in at 1.3% year-on-year (y-o-y), down from 1.6% (revised up from 1.5%) y-o-y in Q213. However, we believe that a stronger manufacturing sector will drive faster real GDP growth in Q413 and into 2014. While a contracting construction sector will continue to weigh on the economy in the near term, we expect a gradual recovery in the sector to take place next year. We therefore forecast real GDP growth to accelerate from 1.6% in 2013 to 3.3% in 2014.
Manufacturing Sector Will Take Off
|The Worst Is Over|
|Mexico - Real GDP Growth, % chg y-o-y|