Economics: Data shows strong economic growth even as rising public deficit and debt pose future problems
As we look back at the indicators released over the course of November, the headline note came from the GDP report for the third quarter. The definitive data showed continuing momentum through an eighth consecutive quarter and prompted many to adopt a brighter outlook. The GDP numbers for the third quarter slightly exceeded expectations and promoted many to raise their forecasts for both this year and next, including Banxico, where there had been talk of possibly easing interest rates sooner than had previously been contemplated.
The tertiary sector continued to soften from the highs achieved early in the year, while public works led growth in construction activity, which has been the main engine for the secondary sector. However, the considerably more restrained government accounts on the public spending rise fail to explain where the accelerating triple-digit gains in civil engineering works are coming from.
Concern continues to grow in relation to public finances through September 2023 under the weight of the current administration’s signature social programs and infrastructure projects. These, combined with declining petroleum revenue, are further inflating public debt.
In economic news this past week, the trade deficit fell in October to a small fraction of the gap registered in recent months and that of the same period of 2022 thanks to growth in petroleum exports. The narrowing of the trade deficit was caused by an increase in oil prices compared with a year earlier and shipments of manufactures, largely on the strength of foreign demand for autos made in Mexico. Meanwhile, the jobless rate fell below levels of a year earlier to 2.9%.
Now read on...
Register to sample a report