sábado, 24 de mayo de 2014

2.7%, not 3.9%...

Hacienda has slashed its 2014 growth projection from 3.9% to 2.7%. Using publication of the first quarter growth figures, Hacienda finally recognized publicly what businesspeople have been saying since January: there's no way the Mexican economy will grow 3.9% this year.

Besides the weather-induced weak growth in the US, Hacienda acknowledged that the fiscal reform hit consumption in the first quarter. The adjective "hard" wasn't used, but there was no need to: the growth rate speaks for itself. Arguing that the "adjustment" to the higher prices resulting from the tax package is pretty much accomplished, Hacienda says that consumption had already begun to pick up in April. The magnitude of the impact of the fiscal reform on consumption can be appreciated by the fact that, according to Hacienda, public sector spending on subsidies, which includes programs directed to the most vulnerable segments of the population, was 30.8% higher in real (discounting inflation) terms in the first quarter of this year than in the first quarter of 2013.

As for public sector investment, Hacienda underlined the 46.5% real increase in the public sector's "physical investment" in the first quarter (oh, the wonders of a low base for comparison) and vowed to "redouble its efforts to assure efficiency, agility and transparency in the execution of public sector spending". That's good news, especially since companies don't report that they've seen seen a burst of public investment.

And, as a reminder of the importance of the energy reform, Hacienda also blamed the 1.1% drop in oil production (a 1.3% contraction in the petroleum sector's GDP) for the weak first quarter. 

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