Economics: April indicators project weakness for the rest of 2022
Inegi’s preliminary reading of GDP for the first quarter of 2022 showed that the economy grew slightly more than expected, expanding at an estimated 1.6% yoy pace. While that may have marked an improvement over the more sluggish growth of the fourth quarter of 2021, it constitutes the most recent evidence of the extent to which the economic recovery is failing to gather any serious momentum.
GDP figures also confirmed a significant weakening of the robust growth trend agriculture had sustained in previous quarters; it had been strong enough to make a positive mark on GDP despite the sector’s relatively minor weight, alongside a moderate recovery in manufacturing in large part owing to the strength of non petroleum exports combined with the effect of much greater oil and export revenues. In contrast, commerce and services turned in a greatly weakened performance amid a relative stalling of consumption.
There were similarly mixed numbers throughout last month’s economic news. Gross fixed capital formation grew a seasonally adjusted 8.4% thanks to gains in spending on machinery and equipment and construction investment, but while growth was generally stronger than expected, the value of construction sector output experienced its most pronounced sequential decline in 15 months.
Inflation sustained its uptrend that took both the headline and core rates to highs not seen in more than two decades, while similarly resilient inflation expectations have contributed to collective bargaining negotiations delivering real-term wage increases. Both factors help set the stage for another 50-basis point rate hike when Banco de México meets on May 12.
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