The economy rebounded during February

After four months of setbacks, economic activity regained traction in February. The Timely Indicator of Economic Activity (IGAE) prepared by Inegi showed that the economy grew 1.4% monthly in February, the highest rate since March 2021.

By components, agricultural activities rebounded 16.5% monthly in February, after the 13.0% drop in January; commercial and service activities grew 1.2%; while the industry had a slight drop of 0.1%. At an annual rate, the country’s economic activity advanced 2.6%, driven by agriculture (5.8%), commerce and services (3.2%) and industry (1.5%).

In the accumulated January-February with seasonally adjusted figures, the country’s economy has grown 1.8% annually.

Factors

For Banorte analysts, the boost to the economy in February came from the commerce and services sector.

They expressed that this continues to point to a positive scenario, since the fundamentals of consumption were mixed, with gains in several figures in the labor market, but with weak remittances at the margin.

“However, the increase in household disposable income was key to supporting the improvement,” they commented in an analysis report.

For their part, Citibanamex economists stated that, despite the good result in February, the trend of aggregate economic activity continues to show a slowdown.

“In this sense, and considering timely information in March, we estimate a growth of 0.2% of the IGAE for said month,” they expressed.

Forward

Banorte economists foresee an acceleration of the economy at the end of the first quarter of the year, based on the favorable result of February and considering the expectation that the momentum will extend to March, they consider that it is very likely that the economy has shown a better performance than in the fourth quarter of 2023. (+0.1% quarterly).

They expressed that, by sector, services could maintain greater dynamism in the short term, since, in addition to the strength of the fundamentals for consumption, two key points are: “(1) The additional income of households receiving programs social, promoting discretionary sectors; and (2) electoral campaigns, resulting in a positive spillover in specific components such as mass media, advertising and specialized consultancies. Another favorable point is the expectation regarding tourism and recreation.”

The estimates of Citibanamex economists also point to GDP growing at a quarterly rate of 0.1% in January-March of this year. But they consider that for the rest of 2024, the economy will remain moderate, because the US economy will lose traction, and the uncertainties over the new governments of Mexico and the US will lead to caution in investment.

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