The Mexican economy in 2023 slowed down with a 0.1% decline in October

The Mexican economy in 2023 slowed down in this quarter according to a report indicating a slight decline.

Despite the positive projections for the Mexican economy in 2023, the recent months show a stagnation, leading to various conclusions and considerations.

The Mexican economy in 2023 seems to have faced a setback in the last quarter of the year, as, after achieving a 0.1% monthly growth in September, it would decline by 0.1% in October, according to the Timely Indicator of Economic Activity (IOAE) from INEGI.

If confirmed that the Mexican economy slowed down by -0.1%, this would be the first decline in 16 months, i.e., since June of last year.

The cooling of activity in October would be due to a decrease in dynamism in the secondary or industrial sector. Additionally, other sectors such as the tertiary or services sector contributed to the monthly decline of 0.1% each, down from a 0.2% growth, respectively.

Alejandra Marcos, Director of Analysis and Strategy at Intercam Casa de Bolsa, mentioned that this deceleration scenario could be crystallizing in the last months of the year.

However, she highlighted that the cumulative growth is 3.4% annually from January to October. Despite these signals, the Mexican economy remains quite robust, even with the extra expenses resulting from the damages caused by Hurricane Otis in the Guerrero region.

The Mexican economy in 2023

Banco Base estimated that, assuming no growth in November and December, the contraction of 0.1% in October would lead to a quarterly GDP growth of 0.14% and an annual growth of 2.68% for the fourth quarter.

“This would imply a GDP growth of 3.28 percent for the entire 2023,” estimated.

In its year-over-year comparison, the IOAE also reveals a cooling, as it grew by 3.5 percent in August, moderated to 3.0 percent in September, and reached 2.9 percent in October, which would be its lowest level since March 2022.

As has been the case throughout 2023, for the upcoming months, the engine of the economy could still be the internal sector, driven by the services sector, which has a 3.0 percent annual growth from January to October, slightly below the 3.1 percent seen during the same period in 2022.

For the next year, the Mexican economy will enter the labor market with strength due to a low unemployment rate and the creation of jobs in the formal sector, which could be up to 700,000 positions, according to IMEF.

Mario Correa, President of the National Committee of Economic Studies of IMEF, said that looking ahead, services could be more resilient, while there would be a moderation in the industry, responding to external demand”.

Also read: The Beer and Soft Drink Sector in Mexico: Significant Tax Contribution.