jueves, 22 de agosto de 2013

Mexican growth: oops...

Whenever someone starts out by saying it will be next year when the economy really takes off, you can bet that this year's growth is disappointing. So it is with Mexico: the 1.0% registered in the first half of 2013 makes it a sure bet that the projections of 3%+ growth in 2013 made a year ago won't materialize. We'll be lucky to see 2% growth this year.

Mexico's GDP rose 1.5% in the second quarter (measured against the same quarter of 2012) - and that included the beneficial effect of Semana Santa having fallen in the second quarter last year. Measured using the US methodology (versus the prior quarter, annualized), Mexico's GDP contracted 3.0% in the second quarter. (US GDP rose 1.7% in the second quarter.) Using the US methodology, both the industrial (secondary)  and the services (tertiary) sectors contracted: the former dropped 4.3% while the latter fell 1.7%.

The base year against which growth is calculated was updated from 2003 to 2008. Prior years' growth figures were restated back to 1994. There were a few significant changes. Neither the 1995 nor the 2009 recessions were as steep as had been reported. Instead of plunging 6.2% in 1995, the drop was 5.7%. In 2009, the economy is now reported to have fallen 4.7% instead of the 6.1% we'd thought. The recovery in 1996 was stronger than we'd thought - 5.9% instead of the 5.2% reported using the 2003 base year - but the recovery in 2010 was weaker - only 5.1% instead of 5.5%. It also seems that growth was 0.4 - 1.3 percentage points weaker between 1999 and 2002.

The Peña Administration's ambitious reform agenda certainly has the potential to boost Mexico's growth rate. The economy's poor performance in the first half of 2013 reminds us that potential must be realized and that, of necessity, takes time.

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