Mexico's GDP declines in the second quarter of 2018

The gross domestic product ( GDP ) of Mexico decreased by 0.1% in the second quarter of 2018 compared to the period January-March where it increased by 1 , 1%, according to preliminary data Tuesday by the official institute of statistics INEGI.

"By component, primary activities (agricultural) decreased by 2.1% and secondary activities (industrial) by 0.3%, while tertiary services (services) increased by 0.3% in the second quarter of 2018 compared to the previous one ". INEGI .

In contrast, in its comparison with the same period of 2017, the Mexican economy recorded a real increase of 1.6%, with a 2.4% increase in services, 2% of agricultural activities and 0.2% of industrial activities, adds the report.

Alejandrina Salcedo, head of economic planning at the Ministry of Finance, stated that this slight setback results from the Easter holidays. in which the activity decreases and this does not change the growth forecast for 2018.

"With this we think that the economy will continue its growth behavior and would not change the growth pattern. forecast interval of 2 to 3%, "he said. 19659003] Economics specialist Raymundo Tenorio Aguilar told AFP that the result is due to a serious setback in the mining sector affecting the oil sector in general.

"Another factor It has been influenced that industrial activity continues in a recessive cycle.

Surprising delay

The consultant Capital Economics describes the contraction as something" surprising "but not as a trigger of "panic."

The company reported in a note that in the second quarter was marked by a drop in agricultural production, which is generally volatile, as well as a contraction in the industrial sector.

Slow growth in the industry sector, adds the consultant, should be "temporary" and attributed to the industry. Last September's earthquake impact.

"We do not believe this marks the beginning of a period of weakness in the Mexican economy. A turnaround was possible in the second quarter after significant growth in the first half (of 2018) and fourth of last year. "

The Mexican economy, the second largest in Latin America, grew by 2.3%. The Bank of Mexico expects an expansion of 2% and 3% and for 2019 between 2.2% and 2.3%

Tuesday's GDP figures are timely and the final figures will be distributed on August 24

Sound Finances

Finance officials also point out that public finances will reach Purpose of reducing the country's debt level in proportion to GDP .

In a report released Monday evening, the entity estimated that the historical balance of public sector financial requirements , the largest measure of Mexican debt, will rise to 45.5% of GDP by the end of 2018, compared with 46% recorded at the end of 2017.

Only for 2018 public deficit target is 2.5% of GDP

"We have healthy and sound public finances and it is good to have a good financial position. will the new administration receive, "said Alejandrina Salcedo.

The new Mexican government, led by leftist Andrés Manuel López Obrador who will take office on December 1 is committed to implementing a severe program of "Republican austerity", which consider not going into debt.

In this regard, Salcedo referred to the recent registration with the US financial authorities of a $ 10 billion public debt program.

The official clarified that the procedure does not involve an investment or an increase in Mexico's indebtedness.

The Mexican economy has been plunged into uncertainty for nearly a year for the future of its trade relations with the United States, which at the time of the year. President Donald Trump demanded a renegotiation of the North American Free Trade Agreement ( NAFTA ), in force since 1994 and in which Canada also participates.

Negotiations were marked by ups and downs, although representatives of the three countries expressed optimism about reaching an agreement before the end of August.

NM